SHARES

Changes to divorce legislation that could affect your financial planning

Two recent court rulings pertaining to the rights of spouses and partners have shone a light on such rights and bear further commentary.

The nature of your marriage contract, or lack thereof in the case of cohabiting couples, sets out the financial consequences of your marriage and as such can have far-reaching financial consequences should your marriage or relationship dissolve through either death or divorce. Two recent court rulings pertaining to the rights of spouses and partners have shone a light on such rights and bear further commentary. These include:

(i) Challenges to the Maintenance of Surviving Spouses Act and Intestate Succession Act

Prior to 1990, our common law made no provision for a surviving spouse to claim maintenance from the estate of the first dying spouse, even if they were left financially destitute. Further, our courts were not able to bind a deceased estate to provide maintenance for the surviving spouse. Thankfully, legislation was passed in 1990 in the form of the Maintenance of Surviving Spouses Act which made it possible for a surviving spouse of a legal marriage to claim reasonable maintenance from the deceased estate until either death or remarriage but only to the extent that they are unable to provide financially for themselves – provided that the marriage was dissolved by death after the commencement of the Act. In determining the reasonable maintenance needs of the surviving spouse, consideration should be given to the amount in the deceased’s estate for distribution amongst their heirs, the surviving spouse’s standard of living during the course of the marriage, and their capacity to provide for themselves going forward.

Since its promulgation, several aspects of the Act have been challenged including a 2005 case which found that the right to claim extends to same-sex partners in a permanent life relationship. However, this left a notable omission in respect of the rights of a surviving partner in a cohabiting heterosexual relationship to claim for maintenance which was eventually ruled about in a 2021 appeal to the Constitutional Court (Bwanya v The Master of the High Court). This appeal also challenged the constitutionality of the Intestate Succession Act which in terms of a 2006 ruling made provision for the surviving life partner in a same-sex relationship to inherit in terms of intestate succession but did not confer the same rights on cohabiting heterosexual partners.

In the Bwanya ruling, the court determined that all types of families deserve legal protection including those who choose to live as life partners as opposed to a marriage, and that life partnerships are characterised by a reciprocal duty of support. As such, the court ruled that the Maintenance of Surviving Spouses Act be amended so that the definition of surviving spouse includes those in a life partnership meaning that the surviving partner should be able to claim maintenance from the deceased partner’s estate if they have failed to do so. Further, the court ruled that the Intestate Succession Act be amended so that the surviving partner in such a relationship can inherit from the deceased partner’s estate if they died without a will.

How does this affect one’s financial planning?

While this ruling is good news for those who choose to cohabit rather than get married, it remains advisable to protect yourself financially – keeping in mind that the proposed amendments to these Acts have not yet happened. If you and your life partner choose not to get married, our advice is to put a cohabitation agreement together which will serve not only to confirm your status as committed life partners but can also set out the financial consequences of your relationship such as how your assets should be divided and the extent to which each partner will be responsible for maintenance in the event of separation. In addition, we advise that each of you drafts a valid will to avoid dying intestate. By drafting a will, you can clearly record your intentions for providing financially for each other and your children in the event of death.

(ii) Sections of the Divorce Act declared unconstitutional

Another significant court ruling which is bound to have far-reaching financial consequences for divorcing couples is a recent Pretoria High Court ruling that declared section 7(3)(a) of the Divorce Act to be unconstitutional. As this section of the Divorce Act currently stands, only a party married out of community of property before 1 November 1984 can ask the courts for an order to transfer an equitable portion of the other party’s assets upon divorce. Prior to 1 November 1984, marrying couples did not have the option of incorporating the accrual system into their antenuptial contracts and upon divorce, many spouses – the majority being women – would walk away from the marriage empty-handed, despite having contributed to the growth of the other spouse’s estate in non-economic ways such as raising the children, maintaining the household, entertaining her husband’s staff and clientele, and generally making it possible for her husband to pursue his career and build his wealth.

In such circumstances, in divorce proceedings, the woman would be able to ask the courts to transfer a portion of her husband’s assets in her favour so as to be fairly compensated for the role she played in the marriage. The outcome of this recent ruling saw the court finding that Section 7(3)(a) is inconsistent with the Constitution because it discriminates against those married after 1 November 1984 with the exclusion of the accrual system as it does not provide the same right to claim transfer of assets from the other party as that provided to parties married out of community of property before 1 November 1984.

Remember, spouses who are married out of community of property with the accrual system have the right to share equally in the growth of their respective estates in the event of divorce, making this type of marriage far more equitable – especially for a stay-at-home spouse. On the other hand, spouses married without the accrual retain their own separate estates both during the subsistence of the marriage and after divorce, something which can be patently unfair to the economically weaker spouse especially if she has sacrificed her career to raise children and maintain the home.

How does this affect one’s financial planning?

In terms of this ruling, if you are married without the accrual system, you would be able to invoke Section 7(3)(a) and claim an equitable portion of the other spouse’s assets upon divorce. However, this claim is not an automatic one, and you would bear the onus of proving your direct or indirect contributions to the marriage to the extent that they contributed to the growth of your spouse’s estate. Remember, however, that this ruling still needs to be confirmed by the Constitutional Court. If confirmed, this legislative change will likely have a major impact on the rights of the economically weaker spouse to claim fair compensation for the role that she played in the marriage.

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Eric Jordaan

Crue Invest (Pty) Ltd

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