The right thing to do?
The purpose of the Accrual System is to create fairness between spouses, especially in the old traditional homes where the wife is running the household, allowing her husband to build up wealth and to support the family as a whole.
This is accomplished by, on the dissolution of the marriage (by death of divorce), dividing the value of the assets obtained during the marriage in equal shares between them. This means that the husband and wife will share equally in the profits of their marriage. With a financial agreement this fair and equitable between spouses, nothing can go wrong, right?
So what went wrong?
Unfortunately, the same System that was implemented to create fairness (as seen above), can in some circumstances also have negative consequences that might not be fair to the remaining spouse, for instance where a spouse dies insolvent (assets are less than liabilities).
Should your spouse die, leaving behind only liabilities, his estate will have a claim against you, being the surviving spouse, for half a share of your estate value due to the consequences of the accrual system. So in the midst of your grief and shock at the loss of your spouse, you may find that not only do you no longer have a source of income (spouses’ salary), but you will also have to pay in an amount of money to the executor to cover debts that you yourself had not incurred. It may mean that you will have to take out an additional bond on the property or incur further debt to cover estate liabilities. Soon your grief may turn into anger.
What should have been done?
The best way to prevent the pitfalls of the Accrual System is to review your estate plan regularly by making use of specialised services in this field, taking into account all the factors relevant at the time. Estate planning starts with a full evaluation of assets, liabilities, personal circumstances and then developing a strategy to minimise risk and protect the value of those assets.