You are Here > Home > Financial Sense Home > A financial survival guide to divorce

A financial survival guide to divorce

Oct 11, 2018

A financial survival guide to divorceFacing the breakdown of your marriage can be extremely painful emotionally, but with the right knowledge and planning, it needn’t be financially devastating as well, says Citadel Advisory Partner Kirsten Smit.

“Getting divorced carries enormous financial implications, but by being proactive you will be able to avoid unnecessary, costly mistakes that could negatively impact your future financial wellbeing,” she notes.

“This means empowering yourself with knowledge, not being afraid to ask questions and making sure that you understand all your financial options and their various implications in order to make the best possible decisions both during and after your divorce.”

With this mind, Smit thus offers a simple financial survival guide with six key tips for women to successfully navigate the process of untangling their finances from a partner.

Check what marital regime you are married under

Your first step when embarking upon the process of getting a divorce should be to check what marital regime you are married under, and how this will impact you financially should you exit the marriage – for instance whether you are married in or out of community of property, and whether the accrual system applies.

Carefully re-examine your financial information

Next, gather together the details of your and your spouse’s assets and liabilities, as well as your income and expenses. This will inform your financial strategy both during and after the divorce, so the more detailed and accurate the information you are able to obtain, the better.

If retirement benefits are to be included as part of the settlement, it is also vitally important to make sure that you understand the legislation around the valuation of these assets when it comes to divorce, as they differ according to the type of retirement product.

It is also critical to immediately reinstate medical aid in your own name if you will no longer be covered under your husband’s medical aid.

Cut back on your expenses

From a financial perspective, divorce not only entails a splitting of assets, but also the additional expense that comes with running two separate homes. This means that, realistically, you will usually need to consider a cutback in lifestyle.

Work through your expenses carefully, looking for places where it will be the quickest and easiest to make potential cuts and savings. Habitual spending is often the hardest to change, but with a fresh perspective and an understanding of the importance of saving, making these tweaks will be easier.

You could also consider downscaling your home, as while there is often an emotional connection to a family home, it is important to remember that downscaling comes with immediate savings in terms of rates, insurance, staff requirements and utilities.

Make savings deliberate

Recent Statistics South Africa figures reveal that, on average, women are expected to outlive men by nearly a decade, meaning that your savings will need to last for longer. To ensure your comfort and financial security into your retirement, it is therefore critical to make saving and investing a top priority. The easiest way is to treat your savings as simply another monthly expense by setting up a debit order, rather than saving whatever is left in your bank account at the end of the month – if anything. If savings aren’t deliberate, they tend not to happen.

Check that your children will be adequately provided for

If you have children, make sure that your divorce settlement document deals with the potential death of a partner, especially if maintenance is involved. In many cases, a life cover policy is put in place for the period under which the spouse is obliged to pay maintenance.

It goes without saying that you will also need to amend your will to reflect your new marital status and change any previous bequests that no longer meet your wishes. Furthermore, it is vital to ensure that both you and your spouse have nominated guardians in your wills.

However, it is worth noting that minor children may not receive inheritances, meaning that any proceeds from your estate would be paid into their guardian’s account. If this is not your wish, you could instead consider setting up a testamentary trust that is to be formed upon your death for the welfare of your children. Also consider setting an age of inheritance or making the request that trustees use some discretion in this regard, as in many cases 18-year-olds lack the maturity or sense of responsibility to manage their inheritance wisely.

Consult the professionals

Obtain the guidance of a specialist family law attorney to help you to obtain the best settlement possible, as well as a professional financial adviser in order to help you plan your long-term financial future and avoid costly financial mistakes.

All financial advisers are expected to give objective and fair advice at all times regardless of the relationships between their clients, so the question of whether you should continue to consult the same adviser as your spouse will depend on your own level of comfort.

Ultimately, it is vital that you select an adviser with whom you feel comfortable, trust implicitly and can work with for the long-term as they guide you through your different life stages.


Submit a Comment

Your email address will not be published. Required fields are marked *

Maya Fisher-French author of Money Questions Answered

Previous Articles

Is a living will legally valid and enforceable?

Juan Buys, Fiduciary Specialist at PPS Fiduciary Services, explains that a living will may not always be enforceable. Sometimes family members face a difficult situation when a decision has to be made about a loved one in circumstances in which they are not able to...

Beware the pitfalls of bequeathing property

When bequeathing property, make sure you have done your estate planning properly. For most middle-class families, the primary residence is the most valuable asset in their estate, as retirement funds fall outside of one’s estate. It is not uncommon for parents to...

Who will inherit your property?

When a person dies intestate (which means without a will), it can become a legal and financial nightmare. If you have property, it’s important to have a will in place which takes the law into account (such as the type of marriage contract you have), and clearly...

How your marital regime affects estate planning

Christel Botha, fiduciary services manager at Alexander Forbes, looks at the impact that various marriage contracts have in the event of the death of a spouse. The month of love has arrived, and many couples will be getting married, or planning a wedding. It makes...

Video: Review your will

Last week was National Wills Week, which is always a great reminder to review your will. If you don’t have one, make sure you prioritise this immediately. To find out more about what should be in your will and what makes a will valid, I am speaking to Monica Moodley,...

Listen: Know the difference between good, bad and ugly credit

Is there such a thing as good credit? What forms of credit should you avoid at all cost? In this podcast, Maya (@mayaonmoney) and Mapalo (@womanandfinance) discuss the good and dark side of credit and whether the concept of the lay-by will come back into fashion as...

Income protection for ‘gig workers’ – finally!

By Elmarie Samuel, Senior Technical Marketing Specialist at life insurer FMI (a Division of Bidvest Life Ltd) South Africa’s gig economy is booming. More people than ever before are earning a living as so-called ‘gig workers’ - working as independent contractors,...

Unmarried couples must ensure they have a valid will

By Elmien Pols, Private Client Trust In these interesting times in which we find ourselves, it is not unusual for people to live together, have children, buy properties and run a business together without formalising their relationship, either through marriage or a...

Listen: How to invest for your kids

Whether you are saving for your child’s education or investing for their future, it's tough to know where and when to invest. When is a tax-free investment appropriate? Should you invest in your child’s name? And where should you save for those school fees? Maya...

Pin It on Pinterest

Share This