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Family Law

A Valentine’s Day Thought for Life Partners: What is a “Universal Partnership”?

By | Family Law, Wills and Estate Planning

“Marriage is the chief cause of divorce” (Groucho Marx)

This Valentine’s Day, think about the legal aspects of your romantic relationship. They’re a lot less exciting than the traditional declarations of love backed up by chocolates and flowers, but they’re just as important in ensuring a strong, committed life partnership in which both of you is clear as to how your respective financial and legal responsibilities are defined.

A recent High Court decision once again puts a spotlight on the fact that “life partner” couples are at ongoing legal and financial risk unless they sign both cohabitation agreements and updated wills.

The problem – there’s no such thing as a “common law marriage”

Our law does not recognise the concept of a “common law marriage”. Either you are formally married, or you miss out on many of the legal protections available to married couples. The result – if you split, or when (not if) one of you dies, the less financially strong life partner could well be prejudiced, perhaps even left destitute after many decades of life together.

The solution – a cohabitation agreement with updated wills

Luckily these two documents give both of you quick and effective protection –

  1. A cohabitation agreement tailored to meet your particular circumstances and needs. It should at the minimum cover questions such as whose name assets and liabilities will be in, who will cover what expenses, how you will split your financial affairs if you part ways, your undertakings to each other regarding financial support and maintenance, parental rights and duties regarding children and so on.
  2. A will (“Last Will and Testament”). You could make two separate wills or one joint one but either way make sure to comply with all formalities to ensure validity and set out your respective wishes clearly and unambiguously. A vital (and all-too-often overlooked) aspect here is to diarise regular reviews of your will/s in case they need updating to take account of ongoing life and financial changes.

Let’s turn now to a “second prize” alternative – proving a “universal partnership”.

What is a “universal partnership” and how do you prove it?

If for whatever reason you don’t have both a cohabitation agreement and wills in place, you may still have a “get out of jail free” card in the form of a universal partnership.

These extracts from the High Court judgment (formatting supplied) set out what you’ll need to prove –

  • “A universal partnership is an agreement between individuals to share their property and their gains and losses. The partnership need not be formed for a commercial purpose.
  • It regularly comes into existence, whether expressly or tacitly, between unmarried cohabitees, although cohabitation is not essential.
  • The requirements for the existence of a universal partnership are the same as those for partnership in general.
  • Where a tacit universal partnership is alleged, a court will confirm its existence if the conduct of the parties is such that it is more probable than not that such a partnership agreement had been reached between them.
  • A partnership exists if “each of the parties brings something into the partnership or binds themselves to bring something into it, whether it be money, or labour, or skill”; if the agreement is struck for “the joint benefit of both parties”; and if the object of the partnership is material gain.
  • The question is … whether, on evaluating those facts as a whole, the probable inference is that there was a universal partnership.”
A bitter family fight shows why it’s second prize
  • In the case in question, life partners had for 26 years shared all their assets “akin to a marriage in community of property”. Importantly, they had shared the “benefits and burdens” of a number of property development ventures. They had, said the Court, each brought something into the partnership, her contribution being mostly financial, his (as an architect) mostly in “sweat equity”. Their partnership was not just a life partnership, it “was also plainly at least partly about material gain.”
  • Their relationship was terminated by the death of the one partner, who died “intestate” (leaving no will in place) after developing dementia. The other partner had suggested they each execute wills leaving everything to each other and he had done so, but she had declined as she was unwilling to contemplate her mortality
  • Her daughter as executor of her mother’s deceased estate refused to recognise any claim by the surviving life partner. Quarrels and evictions followed, with ultimately a hard-fought High Court battle.
  • The Court found that the survivor had on the facts succeeded in proving the existence of a universal partnership. Critically, it held that the parties’ partnership “was also plainly at least partly about material gain” and that the surviving partner should anyway inherit half of the deceased’s estate in terms of a principle previously accepted by our courts that “partners in a permanent life partnership in which the partners have undertaken reciprocal duties of support are entitled to inherit as spouses would.”
  • Accordingly, the survivor gets a full half of the deceased partner’s entire estate, whilst the daughter is removed as executor and ordered her to pay the legal costs.
The winner is…

The bottom line however is that the element of “material gain” which so clearly applied to the joint acquisition of assets in this particular life partnership will be absent (or at least extremely difficult to prove) in many other cohabitation agreements.

First prize must therefore always be to avoid the risks, delay, stress and cost of trying to prove the existence of a universal partnership and/or reciprocal duties of support by having in place both a comprehensive cohabitation agreement and a joint will or reciprocal wills.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

How Does the New Divorce Act Ruling Affect You?

By | Family Law

Media reports of the recent Constitutional Court decision holding a section of the Divorce Act unconstitutional and giving Parliament 24 months to remedy that haven’t always been clear about who needs to be aware of this, and who doesn’t.

Firstly, understand the three “marital regimes” available to you

Legally, marriage amounts to a binding contract, and you have the right to choose between three possible “regimes” –

  1. Marriage in community of property: All of your assets and liabilities are merged into one “joint estate” in which each of you has an undivided half share. On divorce or death the joint estate (including any profit or loss) is split equally between you, regardless of what each of you brought into the marriage or contributed to it thereafter. This is the “default” regime – so you will automatically be married in community of property if you don’t specify otherwise in an ANC (ante-nuptial contract) executed before you marry.
  2. Marriage out of community of property without the accrual system: Your own assets and liabilities, both what you bring in and what you acquire during the marriage, remain exclusively yours to do with as you wish. Note here that the “accrual system” (see option 3 below) will apply to you unless your ANC specifically excludes it.
  3. Marriage out of community of property with the accrual system: As with the previous option, your own assets and liabilities remain solely yours. On divorce or death however you also share equally in the “accrual” (growth) of your assets (with a few exceptions) during the marriage.
Secondly, what’s the new ruling all about?

If you were married out of community of property (a) without the accrual system (option 2 above) after (b) 1 November 1984, you previously could not ask the court for a “redistribution order” – a reallocation of assets between spouses to ensure a fair split. Your marriage could end (be it through divorce or death) with one of you in a strong financial position and the other in a dire financial position, with a court having no discretion to help the spouse with less or no assets. You could literally be left destitute after possibly decades of marriage, with no redress and no claim against your spouse’s assets.

A 2021 High Court order (now confirmed in a Constitutional Court decision) declared unconstitutional the section of the Divorce Act which led to that unhappy state of affairs, so that you can now ask the court for a redistribution order no matter when you were married.

What does it mean in practice?
  • Does this change affect you? The change does not affect you if you were married –
    • In community of property (option 1 above), or
    • Out of community of property with accrual (option 3 above), or
    • Out of community of property without accrual (option 2 above) before 1 November 1984.

    The change does affect you if you were married out of community of property without accrual (option 2 above) after 1 November 1984.

  • What new rights do you have? You now have the right – previously denied to you – to apply for a fair, court-ordered asset redistribution between spouses.
  • Are you automatically entitled to a redistribution of assets? No – you will have to convince the court that “it is equitable and just by reason of the fact that the party in whose favour the order is granted, contributed directly or indirectly to the maintenance or increase of the estate of the other party during the subsistence of the marriage, either by the rendering of services, or the saving of expenses which would otherwise have been incurred, or in any other manner.” In other words, you must prove what contributions you made to the marriage to justify your claim to redistribution.
  • Will the court take anything else into account? What about what you agreed to in your ANC? Importantly, the court can take into account “any other factor which should in the opinion of the court be taken into account”. What you agreed to in your ANC is bound to be a consideration, and as the Court here put it: “This is as wide as can be.The fact that the parties concluded an antenuptial contract excluding the accrual regime could be taken into account.The weight this factor should receive would depend on the circumstances.” Bottom line – the court can take anything relevant into account, including what you agreed to at the time of your marriage.
About to marry?

Which all confirms the importance of making the correct legal choices before you marry to avoid uncertainty, heartache and dispute down the line. Take professional advice on which option is best for you!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Dementia: Understanding Your Legal Options

By | Family Law

“Dementia is the plague of our time, the disease of the century” (Unattributed)

Dementia is a widespread medical condition that affects people of all ages but particularly the elderly, and includes conditions like Alzheimer’s. One of the most significant challenges of dementia is the loss of mental capacity, making it difficult for individuals to make crucial decisions, including those related to their legal affairs, finances and care. This can be particularly problematic when family members are unprepared or unaware of the practical and legal implications.

Beware the Power of Attorney myth

One common misconception is that a signed Power of Attorney (PoA) can authorise a family member to take control of the individual’s financial affairs in perpetuity. In fact, a PoA is only valid as long as the person who granted it maintains “legal capacity”, in other words an understanding of its implications. If and when dementia kicks in, the PoA automatically becomes invalid.

Enduring Powers of Attorney, which continue even after someone loses legal capacity, are valid in some countries but are unfortunately not yet recognised in South Africa.

So, what are your legal alternatives for dealing with dementia?

You will typically have three legal options available –

  1. Curatorship: This involves appointing a curator bonis through a High Court order to manage the financial affairs of the person with dementia (a curator ad personam may in rare cases also be needed to manage the person’s personal affairs). This process can be complex and expensive, but in some cases it may be the only viable option available.
  2. Administration: Similar to curatorship but less complex, less expensive, and quicker, this involves an application to the Master of the High Court for the appointment of an Administrator.It is only available when your family member is a “mentally ill person or person with severe or profound intellectual disability”, which excludes cases of purely physical frailty or disability, and suggests that in cases of mild dementia or mild cognitive impairment only curatorship is an option – but take legal advice on your specific circumstances. An extra element of cost and delay applies in larger estates, in that the Master must commission an investigation into any application where the assets involved are over R200,000 and the annual income is over R24,000 p.a.
  3. Special Trust: An alternative option is to consider a trust or special trust, which can be established if your family member suffers from an early onset of dementia but is still lucid and has legal capacity. All trusts have advantages in that they allow individuals the freedom to choose upfront who the trustees will be and what powers and duties they will have, whilst special trusts come with significant tax benefits over ordinary trusts. Individualised professional advice is essential here.

Understanding the available legal avenues can help you navigate this difficult journey, and with proper planning, personalised legal advice and early action, you can ensure that your family member’s legal and financial well-being is protected at all times.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Divorce: What is Forfeiture of Benefits and When is it Ordered?

By | Family Law

“So often, a party in a divorce is so aggrieved and upset by their spouse’s behaviour during the marriage, and rightfully so, that they cannot fathom having to give up an asset or let their spouse benefit in any way, upon divorce. We have had numerous spouses wanting us to apply forfeiture of the benefits of the marriage based on the other spouse’s bad behaviour during the marriage.” (Extract from one of the High Court judgments below)

Divorce all too often involves high levels of stress, antagonism, dispute and desire for revenge. So, when it comes to splitting up the marital assets, the thoughts of one (or both) of them may well turn to something like “It’s their fault, I want more than just my share, in fact I want everything”.

Which is where the concept of “forfeiture of benefits” (sometimes referred to as “forfeiture of assets”) comes in. It’s an old concept in our law and is increasingly being applied for in our courts, as evidenced in several recent cases which have received wide media coverage. But what exactly does a forfeiture order entail?

What is a forfeiture of benefits order?

The court in granting a divorce has a discretion, in appropriate cases, to order that one party forfeits either all the assets of the marriage, or a specific asset or assets. This overrides both the effect of the “marital regime” of the marriage (in community of property, out of community of property with accrual, out of community of property without accrual) and anything agreed to by the parties in their ANC (ante-nuptial contract).

When will a court order forfeiture?

Forfeiture orders are the exception not the rule, and the onus is firmly on the party claiming forfeiture to establish the basis and amount of their entitlement to it.

The Divorce Act provides that, where a divorce is granted on the grounds of irretrievable breakdown of the marriage, the court may order forfeiture if it is satisfied that one party will otherwise be “unduly benefitted” in relation to the other (the party claiming forfeiture will have to establish the “nature and extent” of that undue benefit). The court will take into account –

  • The duration of the marriage,
  • The circumstances that caused the marital breakdown, and
  • “Any substantial misconduct on the part of either of the parties”.

That gives the court a wide discretion, and every case will be different, but let’s have a look at three recent High Court decisions to illustrate some typical scenarios in which forfeiture was successfully applied for –

  1. A cheating husband loses his share of accrual
    A couple were married out of community of property with accrual. On divorce, that would normally result in a balancing between the parties of the asset accrual during the marriage, but in this case, in granting the wife a divorce from her husband after 12 years, the High Court ordered that the husband “forfeits the patrimonial benefits of the accrual system in total”, including his interest in the wife’s business.

    The Court’s decision followed its findings that the husband was guilty of “shockingly egregious” misconduct during most of the marriage, including living away from home, failing to “contribute to the common home financially, emotionally, or in any other manner”, engaging in a long string of extra-marital affairs and attempting, whilst employed in his wife’s successful business, firstly to fraudulently extort money from it and secondly to hijack the business.

  2. A short marriage ends, and the wife gets nothing 
    Here, the High Court ordered that a wife forfeit her share of the joint estate assets (with “in community of property” marriages a joint estate is formed, which in the normal  course would be divided 50/50 on divorce) after accepting the husband’s evidence that she had “married him to secure financial wealth for herself, advance herself in [the] political arena by using his influence and to benefit from his estate.”

    Relevant factors considered by the Court – the short duration of the marriage (14 months from marriage to separation), the 39-year age gap between them, her lack of love or respect for him and embarrassment at being seen in public with him, and her desire to live an extravagant lifestyle beyond his means.

  3. A husband’s substantial misconduct costs him his share of a joint estate 
    In this matter the Court ordered the husband to forfeit his share of another “in community of property” joint estate, including an immovable property and a share in his wife’s pension interest. The husband’s conduct, held the Court, had been tantamount to “substantial misconduct”, including failure to contribute to household expenses, failure to pay his child’s maintenance until forced to do so by the Maintenance Court, extra-marital affairs and physical, financial and emotional abuse.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Maintenance Claims and Life Partners

By | Family Law

More and more couples are opting to live together as permanent life partners rather than enter into a formal marriage. The risk for such couples is that whilst our law is steadily (if slowly and cautiously) extending many of the protections of formal marriage to unmarried life partners, that process is not by any means complete yet.

A recent High Court decision, refusing a life partner’s claim for interim maintenance after her relationship broke down, illustrates.

A “permanent romantic relationship” and a failed maintenance claim
  • An opposite-sex couple had lived together in a “romantic” relationship for 8 or 9 years, having three young children and splitting when one partner left the common home.
  • That partner then sued her ex-partner for (amongst other things) personal maintenance for herself for ten years or until her “death or remarriage”. She based that claim on her request for a declaration that she and her partner had lived as “partners in a permanent opposite-sex life-partnership in which the partners had undertaken reciprocal duties of support”. That main action is being defended by the ex-partner and is yet to come to trial.
  • In the meantime, having successfully obtained interim maintenance orders for her children, she then asked the High Court to likewise order interim maintenance for herself as well. She asked for R56,000 per month plus payment of medical, motor and other expenses, together with a R1m initial contribution to costs.
  • The Court dismissed this interim application, and whilst its analysis of our current law on the subject, with all the constitutional law ramifications, will be of great use and interest to lawyers, the practical result is what life partners should take note of.
What you must prove to get a maintenance order

Holding that “a ‘permanent romantic relationship’ is not synonymous with a permanent life partnership wherein the parties undertook reciprocal duties of support to one another within the context of a familial setting”, the Court found that the applicant “must first prove facts establishing that the duty of support existed, and that it existed in a familial setting.” (Emphasis added)

She could prove all that, said the Court, in the pending court case. For the moment she must live on her own means, without interim maintenance, until her main action comes to trial.

Practically, if you find yourself in a similar situation you have four choices if you want to claim personal maintenance for yourself (note that maintenance for children is an entirely separate issue, not subject to these limitations) –

  1. As regards interim maintenance, you can hope that a court will assist you despite the outcome in this case, the Court here stating that “In reaching these conclusions we make it clear that they pertain only to the particular case presented to us by the applicant. Our conclusions are most certainly not intended to be of some broader implication or consequence. It thus of course remains open to anyone to approach court for declaratory relief of the nature which the applicant has sought in this matter and it is hoped that, should that occur, this judgment may provide assistance as to the manner in which such an approach should be made.”; or
  2. You can try to prove at the full trial that your relationship was more than a “permanent romantic relationship” and was in fact a permanent life partnership with an undertaking of mutual support; or
  3. You can hope for a change in the law creating an automatic duty of support between you. New legislation on the matter has been pending for many years but appears to be currently stalled. In addition, if this particular case proceeds to trial it may be that something further will emerge from that; or
  4. Clearly the safest solution – you can put the matter beyond all doubt by signing a full “cohabitation agreement” as soon as your relationship becomes a permanent one.
What should be in your cohabitation agreement?

Although everyone’s own situation and needs will be unique, make sure that your cohabitation agreement (also sometimes called a “domestic partnership agreement”) sets out clearly your respective legal rights and financial arrangements both during your relationship and in the event of separation.

Cover questions such as –

  • How will your various assets be divided?
  • Do you undertake a reciprocal duty of support and on separation will each or both of you be entitled to personal maintenance and other financial support?
  • What provisions are made for your children’s support and maintenance?
  • Will there be any financial adjustment between you? What happens for example if only one of you works? Or if you paid for an extension to your life partner’s house or have been paying the bond? Or if one of you brought more into the relationship than the other?
  • Who will take over ongoing liabilities and contracts such as leases, bonds, medical and life policies, monthly accounts and so on?
  • What else that will need to be regulated in your particular circumstances?
Also make wills!

Supplement your cohabitation agreement with a valid will (“Last Will and Testament”) or perhaps a joint will. That’s the document that will count when you die and it’s the only safe way of ensuring that your last wishes are carried out, and that the loved ones you leave behind are properly looked after once you’re gone. Your cohabitation agreement and your wills are separate and essential documents, so have your lawyer draw them all for you at the same time.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Divorce: Remember to Review Your Will!

By | Family Law, Wills and Estate Planning

“It has long been a foundational principle of our common law and the legislation that has governed the law of testamentary succession that a will, properly executed, is the document that authoritatively reflects the genuine and voluntary dispositions of a testatrix.” (Extract from judgment below)

Most people when making wills and estate plans will lean toward leaving all or most of their estate to a spouse in one form or another.

But if things fall apart and divorce looms it is easy in all the stress and hurly burly of the break-up to forget all about your will. Now it may be that you are quite happy to leave things as they are, but it’s far more likely you will want to make changes – big changes.

Either way, it is important to have on your break-up To Do list a big note “Review and change my will”. If you don’t, our law makes your decisions for you – better than nothing perhaps but far from ideal.

The risks of leaving your will unchanged

In terms of our Wills Act, your ex-spouse is excluded from inheriting under your pre-divorce will for a period of 3 months, unless (a very unlikely scenario) your will makes it clear that you wanted your ex-spouse still to benefit despite the divorce.

After 3 months, if you haven’t made a new will your ex-spouse can inherit again because you are assumed to have wanted him/her to remain an heir. In practical terms, you have 3 months to get your act together and make a new will reflecting your new wishes.

But rather than do nothing for 3 months, leave nothing to chance and make your new will as soon as you can. If you do nothing, your preferred heirs (your children perhaps, or other loved ones) are at risk –

  • If you die within the 3-month period, your family could find itself in a bitter fight over your will and how you intended your estate to be distributed. Witness the Supreme Court of Appeal (SCA) case we discuss below.
  • If you survive beyond the 3 months, you may have just left everything by mistake to an ex-spouse from whom you are totally estranged.
A case in point
  • Shortly before her marriage a wife made a will leaving everything to her husband. She failed to revoke or amend that will after their divorce and committed suicide within the 3-month period.
  • Excluded by the Wills Act from inheriting (as set out above) the ex-husband applied to the High Court to have that provision of the Act declared unconstitutional. The High Court ruled against him and he appealed to the SCA.
  • The SCA upheld the constitutional validity of the Wills Act provision, and whilst the Court’s detailed reasoning for reaching that conclusion will be of great interest to lawyers, from a lay point of view what really counts is –
    • The two risk factors set out above remain in place
    • The case serves as a clear warning that not reviewing your will on divorce can easily lead to protracted and bitter litigation, to everyone’s detriment.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

It’s Wedding Season – Three Questions to Ask Before You Marry

By | Family Law

“Marriage is a matter of more worth / Than to be dealt in by attorneyship” (Shakespeare)

Wedding Season is well and truly upon us, and if you (or anyone near and dear to you) is busy planning for marriage (note that we are talking “civil marriage” here, “customary marriages” and “civil unions” are beyond the scope of this article), you will have a long “To Do” List to work through. Venue, invites, catering, flowers, service, this, that, the other. The list goes on, and on…

But no matter how long or complicated your Wedding Plan may get, make sure that “Get All the Boring Legal Bits Sorted” is high on your priority list. Yes, this is the not-fun part of all this, and getting to grips with all the legal niceties is a chore.

But whilst we can all agree with Shakespeare’s observation that “Marriage is a matter of more worth / Than to be dealt in by attorneyship”, understanding and managing the legal consequences of marriage remains absolutely vital.

So, where to start? Ask your lawyer three questions –

1. “Do we need an ANC?”

Whether you need an ANC (antenuptial contract), and if so, what should be in it, will depend in part on which “marital regime” you choose.

This is a critical decision. Which regime you choose now (and you must choose before you marry) will affect you and your family long after the ink dries on your marriage certificate. It will affect all of you throughout your marriage, and it will affect everyone when your marriage eventually comes to an end (whether by divorce or death – both grim prospects, but realities that must be faced).

Our law presents you with three alternatives, and professional assistance is essential here because your choice involves a complex mix of individual preference, circumstance, and personal and financial status –

  1. Marriage in community of property: All of your assets and liabilities are merged into one “joint estate” in which each of you has an undivided half share. On divorce or death the joint estate (including any profit or loss) is split equally between you, regardless of what each of you brought into the marriage or contributed to it thereafter. This is the “default” regime – so you will automatically be married in community of property if you don’t specify otherwise in an ANC executed before you marry. This regime will suit some couples, but most will be advised to rather choose one of the other options (b or c below).
  2. Marriage out of community of property without the accrual system: Your own assets and liabilities, both what you bring in and what you acquire during the marriage, remain exclusively yours to do with as you wish. Note here that the “accrual system” (see option c below) will apply to you unless your ANC specifically excludes it.
  3. Marriage out of community of property with the accrual system: As with the previous option, your own assets and liabilities remain solely yours. On divorce or death you share equally in the “accrual” (growth) of your assets (with a few exceptions) during the marriage.

P.S. Already married? As a side note, if you happen to be married already and you now want to change your marital regime – perhaps you have only now found out that you are by default married in community of property and you realise what a mistake that was in your case – you may still be able to fix things. Ask your lawyer if you might be able to enter into a postnuptial contract. You are in for an expensive court application and requirements apply, so rather make the right choice before you marry.

2. “Are our wills in order?”

Marriage is one of those life events that focuses the mind on how important it is to have valid wills (or perhaps one “joint will”) in place. Existing wills need immediate review. Of course, your will (“Last Will and Testament”) is only the first step in a full estate planning exercise, but it is the foundational step, so prioritise it.

Don’t be tempted to procrastinate on this one – as the old saying has it “Death Knocks at All Doors”, and often it knocks without warning. There’s no other way to ensure that your loved ones will be fully protected and catered for after you are gone.

3. “Can we choose new surnames?”

As a man, you can only change your surname by application to DHA (the Department of Home Affairs) but as a woman you can automatically –

  1. Take your husband’s surname, or
  2. Revert to or retain your maiden surname or any other prior surname, or
  3. Join your surname with your husband’s as a double-barreled surname.   

Ask about the legal ramifications of your choice and tell the marriage officer upfront what your choice is so that your marriage certificate, marriage register and National Population Register all reflect your married name correctly.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

Trusts on Divorce: Are You Stuck with an Ex-Spouse as Trustee?

By | Family Law, Trusts
“Love is grand. Divorce is a hundred grand.” (Anon)
That’s a great scenario whilst the marriage prospers, but what happens on divorce? A recent High Court decision addressed one such scenario – Trusts may be formed for a variety of reasons, and the purpose and structure of each trust will inform the choice of trustees. When it comes to families aiming to preserve and protect family assets for future generations, often both spouses are appointed not only as beneficiaries, but also as trustees.
‘Not the Titanic’ – this marriage took six years to sink
In 2014, whilst a marriage was (as the Court put it in a judgment rich in nautical imagery) “still in calm waters”, the spouses formed four trusts. Two were called business trusts, one a property trust, and the fourth a family trust. Naming choices aside, the critical issue is that both spouses had been appointed as trustees. Regrettably in 2015 the couple “drifted” apart and their marriage “ran aground and settled on the rocky shores of the divorce courts door” with the institution of divorce proceedings. “Unlike the Titanic” observed the Court, the relationship took six years more to be finally laid to rest – the divorce was only granted in 2021.
The ex-spouses apply for each other’s removal as trustee
The ex-husband then applied to the High Court for removal of his ex-wife as trustee of all four trusts on the grounds that she had breached her duties as trustee. Most significantly, he said, she had failed to attend trustee meetings for some five years despite being invited to them.
  • Her main defence was that, in the context of the ongoing divorce proceedings, her ex-husband’s conduct made it impossible for her to attend to her duties as trustee.The Court was unconvinced by her various allegations in this regard, and two aspects in particular bear mention –
    • She complained that being in the minority her decisions were overruled – not an excuse for failing to attend meetings held the Court.
    • Her ex-husband failed to provide a vehicle to enable her to attend meetings – again no excuse, said the Court, there being a provision in the trust deed for virtual meetings.
  • Also counting against her was the fact that she was living in a trust-owned property “but fails to maintain such and pays no rent at all despite receiving the amount of R10 000,00 per month towards property expenses incurred.”
  • Finding that she had not been involved in the trust’s affairs and did nothing to safeguard them, the Court ordered her removal as trustee.
The Court then rejected as being without merit her counterclaim for her ex-husband’s removal as trustee on the grounds of a breach of his duty of trust towards her and a conflict of duty between his private interests and his duties as trustee. Let’s have a look at the law behind those decisions –
What are a trustee’s duties?
Per the Trust Property Control Act: “A trustee shall in the performance of his/her duties and the exercise of his/her powers, act with the care, diligence and skill which can reasonably be expected of a person who manages the affairs of another”.
Must a trustee be impartial?
The Court: “It is not required of a trustee to be total[ly] impartial or [to have] no connection with the beneficiaries, but rather that he or she is capable of bringing the necessary independent mind to bear [to] the business of the trust and of deciding what is in the interests of the trust.”
When will a court remove a trustee?
The court has a discretion which it must exercise “with circumspection”. Per the Court: “The court has to be satisfied that the requested removal will be in the best interest of the trust and the beneficiaries … a mere conflict of interest between trustees and beneficiaries or amongst the trustees [is] insufficient for the removal of a trustee … the overriding question is always whether or not the conduct of the trustee imperils the trust property or its administration”. There is no requirement to prove bad faith or misconduct, rather “the essential test is whether such disharmony, as in the present matter, imperils the trust estate or its proper administration … It is therefore clear that the court may remove a trustee from office in the event that such removal will be in the interest of the trust and its beneficiaries.” (Emphasis supplied)
In closing…
If you are faced with a divorce scenario, avoid a situation such as the ex-spouses in this matter faced by making sure that all questions around any trusts involved – such as who is to remain as trustee, who is to remain as beneficiary and so on – are resolved as part of the divorce process, and not left for future resolution. Even better, take professional advice upfront when setting up trusts on how to avoid any future disputes that may arise should your marriage ever sail into stormy waters. Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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New Ruling on Divorce Assets: How Does it Affect You?

By | Family Law
“…the inequality at hand is caused when, after the conclusion of the marriage, a distortion is caused by the fact that one spouse contributes directly or indirectly to the other’s maintenance or the increase of the other’s estate without any quid pro quo.” (Extract from judgment below)
You may have read of the recent High Court decision declaring a section of the Divorce Act invalid. To understand the importance of this new ruling for many couples about to divorce (and for all couples about to marry), let’s start at the beginning –
A recap – your 3 choices of “marital regime” on marriage
  1. You can marry in community of property: All of your assets and liabilities are merged into one “joint estate” in which each of you has an undivided half share. On divorce or death the joint estate (including any profit or loss) is split equally between you, regardless of what each of you brought into the marriage or contributed to it thereafter. This by the way is the “default” regime – so you will automatically be married in community of property if you don’t specify otherwise in an ANC executed before you marry.
  2. You can marry out of community of property without the accrual system: Your own assets and liabilities, both what you bring in and what you acquire during the marriage, remain exclusively yours to do with as you wish. Note here that the “accrual system” (see option 3 below) will apply to you unless your ANC (ante-nuptial contract) specifically excludes it.
  3. You can marry out of community of property with the accrual system: As with the previous option, your own assets and liabilities remain solely yours. On divorce or death you share equally in the “accrual” (growth) of your assets (with a few exceptions) during the marriage.
Before we move on to the altogether less happy subject of divorce – if you are about to marry, take full advice on which of these options is best for you before you tie the knot!
Does this new ruling apply to your marriage?
This ruling does not apply to you if your marriage was terminated by death or divorce prior to the judgment (which was handed down on 11 May 2022). It does apply to you if –
  1. Your marriage is still in existence, and
  2. You chose Option 2 above, in other words if you are married out of community of property without accrual, and
  3. Your marriage was concluded after 1 November 1984. Why that 1984 cut-off date? Well, what this High Court case was really all about was the fact that where a marriage was concluded before 1 November 1984 (that’s when the new “Matrimonial Property Act” took effect), courts had a discretion to make a “redistribution order” transferring assets between the divorcing spouses. But (until now) courts have had no such discretion for marriages concluded after the cut-off date.
The constitutional invalidity
That time bar – the 1 November 1984 cut-off – is set by a section of the Divorce Act. And that, held the Court, is unconstitutional because it discriminates between couples based solely on the date of their marriage. It deprives couples married after the cut-off date of the opportunity to ask a court for a share of benefits acquired during the marriage, based on their respective contributions (direct and indirect) “to the other’s maintenance and estate growth during the subsistence of the marriage”. In practice (until now), a spouse could be left destitute after spending decades contributing to a marriage and to the other spouse’s wealth. The Court’s declaration of constitutional invalidity, whilst it must still be confirmed by the Constitutional Court, changes all that.
The practical effect of the ruling
  • Courts now have a very wide discretion to order a “redistribution” of assets between you and your spouse, ordering a transfer of assets and money from one spouse to another, regardless of what your ANC provides.
  • That gives you the right to claim compensation for your contributions to the marriage, in other words to claim a fair share of wealth accrued during the marriage (assets brought into the marriage aren’t affected). You will have to prove your case, show what you contributed, and convince the court that a redistribution in your favour is warranted.
  • The practical effect of such a redistribution order “is that the party who contributed to the other’s gain is compensated for its contribution to the extent that a court finds just and equitable. To this end, the court is cloaked with a wide discretion taking into account an infinite variety of factors.” Factors likely to be considered are each spouse’s respective contributions of time, services, savings of expenses, their current financial positions, what was agreed in the ANC, and the like – each case will be different.
  • Note that this is not the same as accrual (Option 3 above). With accrual, the spouse with less asset growth (accrual) during the marriage has an automatic claim against the other for half the difference. But with a “redistribution order”, there is nothing automatic or 50/50 about it – instead the court exercises its discretion as to what (if anything) to award to who.
The aim here is not to put the spouses into equal financial positions, the aim is to redress an unfair financial imbalance. Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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What Can You Do When Someone Close to You Has No Control Over Their Spending?

By | Family Law
“A prodigal is a person who, through some defect of character or will, squanders his or her assets with such abandon that he or she threatens to reduce himself or herself and/or her dependents to destitution” (extract from judgment below)
What can you do when someone you know (often but not always an elderly relative and/or someone with a gambling, drug or drink problem) starts squandering their money and property irresponsibly and recklessly? Note that we are talking here not about a mentally ill person but about someone “of sound mind but unsound habits”. The good news is that you don’t have to look on helplessly while they spend themselves (and their dependants if they have any) into destitution. Our law provides a remedy in the form of a High Court order declaring the person to be a “prodigal” and appointing a curator bonis to manage their financial affairs. It is however a drastic remedy, and you will have to make out a clear and strong case to succeed. Let’s look at a practical example –
The “hard drinker” accused of giving his estate to prostitutes
  • After a 30 year “romantic relationship” soured and ended, one partner sued the other for R2m (or 50% of his estate), repayment of R15k, and maintenance of R7,500 p.m. On the receiving end of this claim was a 68-year-old “semi-retired bookkeeper” who defended it on the basis that he and his former co-habitant had never intended to create a joint estate nor to form a partnership.
  • She then applied for him to be declared a prodigal and “incapable of managing his own affairs”. She claimed that he was “being manipulated and needed assistance” and that he was “busy alienating and giving his estate to prostitutes” to her prejudice. Already a “hard drinker”, she said that “his intake of alcohol had tripled on a daily basis since he got involved with prostitutes”.
  • The man’s version was very different. He admitted spending more than his income but said this “was not out of the ordinary”, he denied spending irresponsibly and said he wasn’t as reckless or wasteful as alleged, the only change in his drinking habits had been a move to drinking at home rather than at the pub since the pandemic struck, he “considered his girlfriend and her daughter as special and wanted to contribute financially towards their well-being” and he was continuing to contribute to his ex-partner’s financial needs “as he always did for the last 30 years”.
  • In dismissing the application, the Court commented that to be declared a prodigal “would be one of the most drastic remedies in the law for the protection of a major person which had the potential to impact on his constitutionally protected rights such as dignity, privacy and freedom … A court will not appoint a curator bonis until it is absolutely satisfied that the patient has to be protected against loss which would be caused because the patient is unable to manage his affairs.” (Emphasis supplied)
  • The onus to prove your case is on you as applicant, and it is a heavy one: “The appointment of a curator constitutes an interference with the right of the person concerned to manage his own affairs. The right should not lightly be interfered with, especially not on the basis of what amounts to no more than vague and unsubstantiated allegations … A proper enquiry into the mental condition of the alleged patient should be held before a court could interfere with the right of an adult to control his own affairs.”
  • “It is clear” concluded the Court “that no real factual basis was laid to justify the granting of the relief sought”. Application dismissed, with costs.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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