Planning for divorce financially starts with knowledge and understanding. Knowledge is power. As much as divorce is a painful and horrible thing to go through, it’s a process you want go through properly and thoughtfully. Take your time to equip yourself with the facts and knowledge that will allow you to make a fresh start on the right footing. You don’t want to realise once its too late that any divorce settlement you agreed isn’t actually equitable or in your interests. So as part of our series on divorce, and in particular, how it relates to your finances and money – we also created some common FAQ about terms and concepts that are useful to know a bit more about.
Divorce can be a tough process, and it’s even tougher if you’re not prepared financially which is why it’s super important to plan for divorce financially and get advice on how to split your assets before finalizing the divorce. Once a divorce order is in place, it’s tough to change, and if it’s not fair, it can leave you in a tough spot financially. A good financial planner or advisor can also help you calculate maintenance claims amongst other things using sophisticated modelling tools to ensure your needs will be taken care of post your divorce.
Pro Tip: Read our editorial on divorce financial advice for more information on the financial considerations
An ante-nuptial contract is an agreement you enter into before getting married. It sets out the financial consequences of the marriage and can be customized according to your needs. It can include terms about possession of assets, control and ownership of property, and how assets will be split if the marriage ends.
The accrual system was introduced in South Africa in 1984 to help couples share the growth of their estates during the marriage. If the marriage ends, the growth of each estate during the marriage is shared equally between the two parties.
The clean-break principle was introduced in 2007. It means that the spouse who is not a member of a retirement fund at the date of divorce can have immediate access to their pension interest benefit which was awarded in terms of the divorce order.
After a divorce, it’s super important to check and update the beneficiary nominations on your various policies. If you have minor children, seek expert advice before naming them as beneficiaries of your life policy. It’s also critical to update your will so that your former spouse doesn’t inadvertently inherit. You have 3 months from the date of divorce to do this.
Our laws allow a court to make an order that one party forfeits the patrimonial benefits of a marriage. This means that a specific asset or even all benefits are forfeited regardless of what your marriage contract says. A court may make an order that the patrimonial benefits of the marriage be forfeited by one spouse in favour of the other, either wholly or in part based on the following considerations, i) having regard to the duration of the marriage, ii) the circumstances which gave rise to the breakdown iii) any substantial misconduct on the part of either of the parties – and is satisfied that, if the order for forfeiture is not made, the one spouse will unduly benefit in relation to the other.
An opposed divorce (or contested divorce), is when you cannot reach an agreement on some or all of the aspects regarding the divorce. These divorces can take a long time to finalize and can be expensive with all the hefty legal fees etc. An uncontested (unopposed) divorce on the other hand is when you gree to the terms of divorce like division of assets, maintance, custody in an amicable manner.
A court order issued where divorce proceedings could take time and where one spouse needs interim maintenance from the other to cover their living costs. An application for interim maintenance can be done relatively quickly and cost-effectively to provide financial assistance until the finalisation of the divorce. Proof showing lack of financial means by the applicant and that their spouse can afford it, must be provided.
A settlement agreement is a contract that you and your spouse negotiate because you’re not bound to adhere to the terms of your marital regime when negotiating a settlement. This tends to happen in uncontested divorces and where the divorce is amicable. It covers everything from maintenance, division of assets, custody etc.
There is a lot to consider when planning for divorce financially, so understanding some of the key concepts and principles is a good start. Continue your reading and education by checking out these articles next.