July 15, 2022
Trusts on Divorce: Are You Stuck with an Ex-Spouse as Trustee?
“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.
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.© LawDotNews
May 26, 2022
New Ruling on Divorce Assets: How Does it Affect You?
“…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
- 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.
- 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.
- 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 –
- Your marriage is still in existence, and
- You chose Option 2 above, in other words if you are married out of community of property without accrual, and
- 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.
© LawDotNews
April 26, 2022
What Can You Do When Someone Close to You Has No Control Over Their Spending?
“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.
© LawDotNews
January 31, 2022
Why Life Partners Still Need Cohabitation Agreements and Wills
“Census data of 2016 reveals that approximately 3.2 million South Africans cohabit outside of marriage and that this number is increasing steadily.” (Extract from judgment below)What happens if your life partner dies without leaving you anything in their will (“Last Will and Testament”)? Do you have the same protections as married spouses do? A lot of the media coverage around the recent Constitutional Court decision dealing with this question may have given the impression that life partners are now as fully protected as if they were in a formal marriage, but that is not so – not yet anyway. First, some background.
Protections for surviving spouses only, not for unmarried life partners
As a starting point, note that the widely-believed and persistent myth of a “common law marriage” is just that – a myth. And the hard truth is that if a life partner dies intestate (without making a will), the other cannot inherit on the same basis as can a married spouse. Nor can the surviving life partner claim maintenance from the deceased estate on the same basis as a surviving spouse can. Spouses enjoy these protections in terms of two Acts –- The “Maintenance of Surviving Spouses Act” provides for a spouse to claim maintenance from the deceased estate.
- The “Intestate Succession Act” deals with cases where a deceased spouse left no valid will and provides for a spouse to receive only a “child’s share” of the estate (in other words, to share equally with any children) – far from ideal of course if the intention was to leave them more, but a lot better than nothing.
The Court’s decision, and why life partners must still protect their positions
An unmarried man, although intending to marry his (female) partner, died before doing so. He left substantial assets but his will was outdated, leaving everything to his (since deceased) mother. The executor of his deceased estate rejected, primarily on the basis of existing law, her claims to inherit from the estate or to be granted maintenance from it. Confirming High Court declarations of constitutional invalidity, the Constitutional Court held the relevant sections of the Acts to be invalid as they stand, and ordered that they be read so as to include life partners in their protections. However there are critical limitations to bear in mind –1) The orders of invalidity aren’t in force yet.
The Court suspended the orders for 18 months (to June 2023) to give Parliament time to remedy the defects. Perhaps Parliament will move quickly on this and do the necessary before mid-2023, but perhaps it won’t. And in the meantime, your lack of protection remains.2) You will still have to prove your entitlement.
You will have to convince the executor and Master of the High Court (possibly in the face of opposition from the deceased’s other family members) that –- You were in “a permanent life partnership” (our courts apply a number of tests in assessing this),
- As partners you “undertook reciprocal duties of support” (in this case the partners were held to have been “involved in a relationship that comprised most, if not all, characteristics of a marriage”),
- For your maintenance claim, that your claim is for your “reasonable maintenance needs”, and
- For your intestate succession claim, that you have “not received an equitable share in the deceased partner’s estate”.
3) “Intestate” Succession is always second prize.
As we said above, a “child’s share” of an estate is a lot better than nothing, but if you want your partner to inherit everything, dying without a will risks prejudicing them badly. Leaving a valid will is the only way to nominate the executor of your choice, and to choose for yourself what happens to your estate on death. It could well be the most important document you ever sign.Life partners: Sign wills and a cohabitation agreement – now!
That’s a lot of uncertainty and potential for conflict and delay, and there could well be a lot at stake (in this case, some R10m worth of assets in total) but the good news is that it is all very easily avoided –- Have professional wills drawn up (or have your existing wills checked for necessary changes or updates) and
- Enter into a full cohabitation agreement recording exactly what your status is and what undertakings you make to each other. Remember there is no such thing as a “common law” marriage in South Africa – if you aren’t formally married, a cohabitation agreement is the only safe alternative.
© LawDotNews
January 31, 2022
Divorce: Claiming Interim Maintenance and a Contribution to Legal Costs
Even if your marriage is collapsing around you, you might be afraid to sue for divorce because you have no money to survive on, plus you know that a hotly contested divorce might take years to finalise while your breadwinner spouse fights you tooth and nail every step of the way. How will you support yourself and your children until the case is finalised? How will you pay your lawyer to run the case for you? Must you wait for the end of the case before you see a cent? The answer luckily is “no” in that you have a relatively quick and simple remedy in the form of asking the court for “interim relief” in respect of –- An order that your spouse pay you –
- Maintenance (for children and/or for yourself) pending finalisation of the divorce,
- A contribution towards your costs in the divorce proceedings,
- Interim care of, and contact with, your children (if there is any dispute over this aspect).
A “coy about his wealth” spouse ordered to pay up – now
- The warring spouses here are a senior banking executive and his wife, who qualified as a teacher but gave up that career to become a homemaker and mother to the couple’s two children.
- She asked the High Court for interim maintenance for herself and the children, and for a contribution to her legal costs.
- In assessing these requests the Court laid out some of the general principles involved –
- Unless the care and residence of children is involved the issues are straightforward, relating to “the applicant’s reasonable needs, and the respondent’s ability to meet those needs. The applicant’s entitlement to maintenance must be assessed having regard to the standard of living enjoyed by the parties during the marriage.” This should be “a simple and straightforward calculation of needs and means”. (Emphasis supplied).
- The aim is “to avoid substantial prejudice to either party pending divorce. It is not to provide a precise account of what is due to or from either party, according to the parties’ or the court’s sense of morality, propriety, the blameworthiness of the parties’ conduct during the marriage, or their habits of living after the separation.” The case should be cast in practical rather than moralistic terms, and the “emotional heat of a separation” should be kept out of it.
How much money could you be awarded?
Of course every case will be different, but where the parties have, as in this case, enjoyed a high standard of living, the figures can be substantial. Here for example the Court’s awards were sizeable, commenting that the husband “is coy about his wealth, but there is little doubt that he has a substantial income” – just under R7m in the previous year – with “considerable resources” and an estimated net worth of just over R40 million. Moreover the couple had enjoyed “a very comfortable lifestyle” together. The end result is that the husband must pay substantially what his wife asked for in the form of R1.6m immediately and thereafter R108k p.m. –- R88,701-69 p.m. for the wife and children’s interim maintenance, plus school fees, extra mural activity costs, medical aid and medical costs
- Rental of up to R20,000-00 p.m., plus cost of utilities
- R34 656.39 for house moving costs
- R1,572,945-80 as a contribution towards the wife’s interim legal costs.
© LawDotNews
November 12, 2021
Unmarried Parents: A New ‘Notice of Birth’ Ruling for Fathers, with 3 Surname Choices
“Whilst the Act no longer uses the term “illegitimate child” this is implied by the reference to so-called children “born out of wedlock” which continues to perpetuate the common law distinction between so-called “legitimate” and “illegitimate” children. This reference is a stark reminder that we, as a nation, are still grappling with outmoded legal terminology which goes to the core of dignity and equality, not only for the child but also the unmarried father, and indeed the unmarried mother as well.” (Extract from judgment below)New parents, married or not, are obliged by the Births and Deaths Registration Act (“the Act”) to register their child’s birth with Home Affairs within 30 days. However in regard to the actual process of giving this “notice of birth”, the Act has always distinguished between married and unmarried parents. In particular, unmarried fathers have until now been unable to register the child under their own surname except with the mother’s permission. Given the importance – to the child, to the parents and to their wider families – of what surname is entered into the population register, it is perhaps no surprise that the validity of the Act’s differential treatment of married and unmarried parents has been challenged in the Constitutional Court. The Court’s decision is that the relevant part of the Act is unconstitutional and is struck down. The Court: “Children born to parents outside the marital bond are blameless, yet the retention of section 10 of the Act serves to harm children born outside of wedlock. The status of being born out of wedlock, in effect, penalises the child and the unmarried father, and of course the mother too. This differential treatment of children born out of wedlock is invidious and unconstitutional. This differential treatment cannot be justified.”
The practical effect of the ruling, and the parents’ 3 surname choices
From now on, unmarried parents are in exactly the same position as married parents, so that either of them can give the notice of birth under –- The father’s surname, or
- The mother’s surname, or
- The surnames of both the father and mother joined together as a double-barrelled surname.
© LawDotNews
July 2, 2021
Can You Change Your Marital Regime After Marriage?
“A journey is like marriage. The certain way to be wrong is to think you control it” (John Steinbeck)One of the most important decisions you must make before you marry is what “marital regime” (“matrimonial property system”) you want to apply to your marriage. To recap, you have three choices –
- Marry in community of property: This is the default in South Africa if you don’t sign an antenuptial contract (“ANC”) before you marry. All your assets and liabilities (with a few specific exceptions) are pooled in one joint estate. It’s probably not the best choice for most couples – you don’t for example want to be lumbered with a poor credit record (and a bank rejecting your bond application for example) or even with a sequestration application because of a spouse’s debts. But as the old saying goes, “it depends…”
- Marry out of community of property with accrual: The most popular option with couples these days, under this regime you keep as your own separate property whatever you brought into the marriage, but in the event of divorce or death you share equally in any subsequent “accrual” (growth in asset value built up during the marriage). You must specify accrual in your ANC, otherwise “without accrual” (as below) will apply.
- Marry out of community of property without accrual: As the name suggests, under this regime you have your own separate estates, and there is no sharing of accrual. The best choice for some couples in some cases, but probably not for most.
“Oops, we made the wrong choice; what now?”
A surprising number of couples tie the knot without any thought for the legal consequences, and only later do they learn that because they had no ANC they are married in community of property with all that that entails. Or perhaps they did think it through but made the wrong choice at the time. For example, you could find yourself needing to improve your personal credit record, perhaps after applying to a bank for a mortgage bond and being rejected because of your spouse’s debts. The good news is that all is not lost – you can still change regimes with a “postnuptial contract”. The bad news is that we are talking an expensive application to court here, and there are various requirements which may frustrate your application.A court order is essential
The Matrimonial Property Act specifically allows a married couple to “jointly apply to a court for leave to change the matrimonial property system, including the marital power, which applies to their marriage”. You will have to satisfy the court of three things, namely that- there are sound reasons for the proposed change;
- sufficient notice of the proposed change has been given to all the creditors of the spouses; and
- no other person will be prejudiced by the proposed change.
The couple who didn’t get court authority
- A couple had married out of community of property excluding accrual.
- Thereafter, the wife drew up an agreement as “an ‘insurance policy’, to allay her fears of insecurity in the event of a divorce”. The husband agreed to set aside his marriage contract, specifying that his wife was entitled to half of his estate.
- After some hesitation the husband signed this agreement, but critically it was never sanctioned by a court as required and was merely handed to friends for safekeeping.
- During subsequent divorce proceedings, the wife was forced to abandon her main claim (that the agreement was valid and binding) precisely because of her failure to obtain a court order as set out above.
- She also tried another tack, namely that the agreement was enforceable as an agreement “in anticipation of divorce”. This was rejected by the Supreme Court of Appeal on the facts, finding that the parties had had a “normal marital relationship” after the signing of the agreement, and that the wife had accordingly failed to prove that divorce “was in the parties” contemplation when the agreement was concluded”.
- The Constitutional Court cemented her defeat in this regard by refusing its leave for her to appeal the SCA decision.
© LawDotNews
April 20, 2021
Who Gets the House on Divorce?
“I am a marvellous housekeeper. Every time I leave a man, I keep his house” (seven-times-divorced actress Zsa Zsa Gabor)Historically 44% of South African marriages have ended in divorce, and there has reportedly been a 20% surge in new divorce applications since lockdown. For those unfortunate couples whose marriages do eventually fall apart, often the most important asset in play from both a financial and an emotional perspective is the family home. So it is crucial for any couple contemplating marriage, or currently married but considering a split, to understand what our law says about who gets what on divorce. Your divorce order as issued by the divorce court will be the “final word” here. If you have been able to agree on a split of assets and liabilities your agreement will typically be contained in a “consent paper”, and agreement is of course very much “first prize” here. Particularly if you have children – exposing them to a bitter fight over assets and to the risk of having to leave their childhood home and neighbourhood will only add to the disruption and trauma in their lives. In any event if you can’t agree terms, you are in for some emotional, time-hungry and expensive litigation before a court finalises the split for you. A variety of factors will be at play here, all linked to the question of what “marital regime” applies to your marriage so the first question you need to ask is whether you are married in or out of community of property – and if out, does accrual apply?
If you are married in community of property
This is the default marital regime for South African marriages, and if you didn’t sign an ante-nuptial contract (“ANC”) before you married, all your assets and liabilities at date of divorce (with a few specific exceptions) will automatically belong to both of you in “undivided shares” i.e. 50/50. Typically, your divorce order and/or consent paper will provide for one spouse to become the 100% owner, with a suitable financial adjustment between you to account for the value of the other spouse’s 50% share. No formal transfer of the property in the Deeds Office is needed, your attorney will just arrange for an endorsement on the property’s title deed to transfer ownership.If you are married out of community of property
You have two separate estates and what you bring into the marriage remains yours, as does any growth in asset value during the marriage. As to who keeps (or gets) the house, and as to how much if anything the other spouse must pay in return, that will depend on a host of factors including the terms of your ANC and whether you were married with or without “accrual”. “With accrual” is the default unless you specifically opt to marry “without accrual”. In practice most modern couples specifically opt for accrual, in which event the combined growth in value during the marriage of your two estates will be split between you. If the house is currently registered in only one of your names and that spouse is to keep the house, no formal transfer nor endorsement of the title deed will be necessary. If however the other spouse is to become the registered owner, a full transfer of ownership in the Deeds Office is needed. Although an exemption from transfer duty applies in this case, there will still be other transfer fees and costs to consider. If you are co-owners of the property (in other words, if you are jointly recorded as owners on the title deed) you will almost certainly want to transfer full ownership to the one spouse. Again, a full transfer will be needed (see above re costs). There is however nothing to stop you agreeing on a temporary or permanent continuation of the co-ownership after divorce, perhaps to minimise disruption to your children’s lives, or perhaps while you jointly market and sell it at the best price (in which event your agreement should specify in detail who will pay what costs, what the minimum purchase price will be and so on).Who pays off the mortgage bond?
If you are currently registered as co-owners, both of you will be equally liable for the full remaining debt owing to the bank. If one of you is the owner and the other is to take transfer, the current owner remains solely liable for the loan debt until released by the bank. Whichever spouse keeps (or takes over) sole ownership of the house will have to make a new loan application to the bank in his/her own name and be substituted as the sole debtor/mortgagor.If you get the house, how will you pay out your ex-spouse?
As above, normally there will be a financial adjustment between you to compensate the other spouse, and if you don’t have the funds available you may need to ask the bank for a second mortgage. You could of course also agree to sell the house and split the proceeds after settling the existing bond.What if our house is owned by a trust or company?
Houses and other properties have historically often been held in trusts or companies for estate planning and asset protection purposes, and our courts are regularly called upon to resolve bitter disputes along the lines of “it was all a sham, the house never really belonged the trust, so please Judge order the trust to put it back into the pot as a personal asset”. The spouse making such a claim will generally have to prove some form of “abuse” of the trust before a court will order that the house in fact belongs to the other spouse personally. But there are grey areas here and professional advice specific to your particular circumstances is essential.Prevention being better than cure….
Your house could well be your marriage’s most important asset both financially and emotionally. Rather than fight over it when divorce looms, seek professional advice before you tie the knot on what marital regime is best for you, and on how best to sort out who gets the house if you should be unlucky enough to part ways down the line. 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 advices© LawDotNews
April 20, 2021
Buying a Property: Check the Seller’s Marital Status!
“…a third party is expected to do more than rely upon a bold assurance by another party regarding his or her marital status” (quoted in judgment below)If you are taking advantage of our current low interest rates and reduced selling prices to buy a property, make sure that you establish the seller’s marital status with something more than what the seller tells you. Your risk comes in if the seller is married in community of property. That’s because, whilst our law generally allows spouses in such a marriage to “perform any juristic act with regard to the joint estate without the consent of the other spouse”, there are exceptions. And one exception relates to immovable property. A spouse needs the written consent of the other to sell, mortgage or burden the property (by granting a servitude over it for example). Without that written consent the transaction is void, unlawful and unenforceable. Which is where the danger comes in. Consider this scenario – you pay for and take transfer of a property from a seller who you think is unmarried, but a spouse suddenly appears and says “I never consented to that sale so it’s void. The transfer to you is cancelled so out you go and good luck getting your money back”. What now?
Competing rights and a balancing act
There is of course a fine balancing act for courts involved here – on the one hand, the rights of the non-consenting spouse and on the other hand your rights as a good-faith buyer from a seller who you believed to be unmarried. A recent Supreme Court of Appeal (SCA) judgment addressed exactly that situation.“But I thought I was buying from an unmarried seller”
- A husband married in community of property sold and transferred a house to a buyer in 2009. At the time, his wife was not living in the house, having moved to another part of the country due to old age.
- When the seller passed away in 2013 his wife was appointed executrix of his deceased estate. Some four years later she successfully applied to the High Court for cancellation of the deed of transfer on the basis that the sale had been without her knowledge or consent.
- The buyer appealed to the SCA on the basis that the wife’s consent to the sale should be “deemed” to have been given in that the relevant legislation provides for such deemed consent where a buyer “does not know and cannot reasonably know that the transaction is being entered into contrary to [the requirement for written consent]”.
- He had, said the buyer, acted bona fide (in good faith) as he had not known of the marriage: “At the time I purchased the property from the deceased/seller, he was staying alone in the said property and he also confirmed to me that he was not married. He signed the deed of sale and also the transfer documents alone as unmarried.”
What the buyer must prove
The buyer had to prove that he did not know, and could not reasonably have known, that consent was needed but lacking. What the Court here needed to decide was whether the buyer should at the time of the sale have known of the marriage and the lack of written consent. “A duty is cast on a party seeking to rely on the deemed consent provision” held the Court “… to make the enquiries that a reasonable person would make in the circumstances as to whether the other contracting party is married, if so, in terms of which marriage regime, whether the consent of the non-contracting spouse is required and, if so, whether it has been given.” Finding that the buyer had indeed proved (1) that he did not know that the deceased was married and (2) that he could not reasonably have known this, the SCA allowed the appeal and the transfer to the buyer stands on the basis of deemed consent by the spouse. The facts of each case will be different, and it is important to bear in mind that in this particular matter the husband’s claim to be unmarried was supported not only by the absence of any sign of a wife but also by two official documents – the deed of transfer and the power of attorney to pass transfer. The bottom line is that as buyer you must make “reasonable enquiries” as to the seller’s marital status and as to whether the other spouse’s written consent to the sale is needed.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
December 17, 2020
Grandparents – When Must You Pay Maintenance?
“An inability on the part of the parents to maintain a child must be established before a grandparent will be legally liable to do so” (extract from judgment below)
One wonders how many grandparents are aware of (let alone plan for) the possibility that they may have a legal duty to support their grandchildren in certain circumstances.
It could be a heavy blow – trying to navigate one’s retirement financially can be hard enough without suddenly having to maintain not only yourself and your spouse but also a grandchild, possibly for decades. And what about the risk that when you die your deceased estate might remain liable – a drain, possibly a critical one, on your estate’s sufficiency to support your surviving spouse?
A recent Supreme Court of Appeal (SCA) decision confirms that –
- As a grandparent you are potentially liable for maintenance during your lifetime but
- When you die, your deceased estate will (as the law currently stands) not be liable.
The adult granddaughter’s claim and the law
This was a damages claim against the executors of a grandfather’s deceased estate based on the proposition that the estate was liable to pay maintenance for a 30-year-old granddaughter unable to support herself because of psychiatric issues, mild intellectual disability and an autism spectrum disorder. The father had emigrated, had paid no maintenance, and was allegedly untraceable, whilst the mother’s ability or inability to fully support her child had not been established.
The SCA was asked to break new legal ground by extending a grandparent’s liability to his or her deceased estate, but on the evidence before it in this case (i.e. our courts may revisit this issue in the future) the Court declined to extend the law in this way, and set out our current law as follows –
- Liability for maintenance generally depends on three factors –
- The claimant’s inability to support him or herself.
- His or her relationship with the person from whom support is claimed.
- That person’s ability to provide support.
- The primary caregivers are the parents who have a duty of support as far as they are able to do so (this applies also to the parents’ deceased estates when they die).
- Parents and children have a reciprocal duty of support.
- “If parents are unable to support their children who are in need of support, other relatives including grandparents, may be obliged to support them … But that duty is imposed first upon a nearer relative before it moves to remoter ones.” (Emphasis supplied).
- However, as our law stands, a grandparent’s deceased estate is not liable.
In summary – 3 factors for liability
In other words, you (but currently not your deceased estate) could be liable to pay maintenance if –
- Your grandchild is not self-supporting,
- Neither parent (nor their deceased estates) is financially able to provide the necessary support, and
- You are financially able to do so.
© LawDotNews
