The financial implications of divorce

Divorce finance implications

Divorce is more than the end of a relationship

Divorce is, first and foremost, an emotional event. Or is it? Historically, marriage was often not about love, but about property. Marriage was a foundation of economic and social stability. Marriages were frequently enacted to strengthen alliances or consolidate wealth or land. Marriage formed the basis of raising children and continuing a family line. And in many cultures, a union sanctified by the community’s chosen religion was the only acceptable environment for a physical relationship between two people. That’s not to say that married couples didn’t love each other. But love was not usually the primary motive for marriage. Correspondingly, divorce was uncommon, because falling out of love was no reason to end the marriage. Divorce was often socially stigmatised and/or prohibited by religion. It was rarely in a woman’s interests to divorce, as her social and economic status was intertwined with that of her husband. Fast forward to today and divorce offers couples a means to move on with their lives when the relationship is no longer a fulfilling one. Gone is the stigma. So it’s easy to think of divorce purely in emotional terms. But it is also the ending of a legal contract, one in which the individuals’ financial lives have been joined. Finance should not be a reason for staying in an unhappy marriage (though it often is), but couples considering divorce should be aware of the financial implications of divorce. Going into divorce proceedings with eyes open will result in a better outcome for all parties.

Understanding matrimonial property regimes

The financial implications of divorce largely depend on the matrimonial property regime. In South Africa, historically marriages were “in community of property”, which means that assets and liabilities acquired during the marriage are shared equally between the spouses. However, this principle can be modified or excluded by an antenuptial contract or ANC. Marriages enacted with an ANC in place are deemed “out of community of property”, either with or without accrual. A marriage out of community of property with accrual allows the spouses to retain the assets they owned before the marriage but share in any gains made during the marriage. In marriage out of community of property without accrual, each spouse retains their own assets and liabilities and, if the marriage is dissolved, each keeps their own estate plus all growth accrued during the marriage. The matrimonial property regime in place will impact how assets and debts are divided upon divorce.

Types of divorce and their costs

There are three types of divorce in South Africa — uncontested divorce, mediated divorce, and contested divorce. Each has different implications for the duration and cost of the divorce process. Uncontested divorces are typically the quickest and least expensive, while contested divorces can be lengthy and costly. In a mediated divorce couples who are unable to agree a divorce settlement employ the services of an attorney and/or professional mediator to help them negotiate and reach agreement. A mediated divorce costs more and takes longer than an uncontested divorce, but is quicker and less costly to finalise than a contested divorce.

Dealing with hidden or dissipated assets

One of the most challenging aspects of divorce can be dealing with a spouse who is hiding or dissipating assets. It’s important to ensure a fair division of assets, and this becomes difficult when one party is not transparent. If you suspect your spouse is hiding assets, gather as much financial information as possible and seek legal advice. Keep records of the suspicious behaviour or financial discrepancies and gather any evidence that could support your claims, such as bank statements, financial documents, or communication records that indicate hidden assets or financial transactions. Your attorney can assist you with hiring a forensic accountant or other financial expert such as an actuary who specialises in uncovering hidden assets. These professionals have the expertise to trace financial transactions and analyse bank statements, business records, and other relevant documents to identify any hidden assets or income.

In addition, there are various accountability measures in the divorce procedure such as discovery or subpoenas to financial institutions. A subpoena is a formal written order that requires a person or organisation to appear before a court or produce documentation. Discovery is a legal process that allows both parties to request information and documentation from each other. Your attorney can use these tools to force your spouse to disclose financial information and provide documentation related to their assets and income.

Another tactic is dissipation of assets after the initiation of divorce proceedings. This is slightly different from hidden assets. Dissipation in a divorce context means wasting marital assets. It is effectively the squandering of marital property to prevent the other spouse from receiving a fair share of the marital estate in the divorce agreement. Dissipation can be prevented through an anti-dissipation order. If you think your spouse is dissipating assets, inform your attorney, who can present the evidence to the court. The court can then order your spouse to disclose all assets and provide accurate financial information. Non-compliance with court orders can have serious consequences.

Consider mediation

Alternatively, you may want to explore mediation. This is a less adversarial environment in which to address financial issues, including hidden assets. A mediator, who is a neutral third party, can help facilitate discussions and negotiations between you and your spouse.

Asset division and maintenance

Asset division can be a contentious issue in divorce proceedings. You need to have a clear understanding of your financial situation, starting with your matrimonial property regime and including all assets and liabilities in the estate(s). This includes property, investments, retirement funds, and debts.

Maintenance is another financial aspect of divorce. The amount of maintenance is determined by several factors, including the earning capacity of both parties, the standard of living during the marriage, and the needs of any children involved.

Choosing a financial adviser

During a divorce, a financial adviser can provide valuable guidance. They can help you understand the financial implications of your divorce agreement and plan for your financial future. When choosing a financial adviser, consider their experience with divorce, their credentials, and their approach to financial planning.

Don’t forget your will!

It is important to update your estate planning documents, such as your will and the beneficiaries on your insurance policies, retirement funds, and other financial accounts, after a divorce. Failure to do so may result in unintended consequences, and assets may not be distributed according to your wishes.

Cost of divorce and fee structures

At Simon Dippenaar & Associates Inc, we understand the financial strain that divorce can bring. That’s why we offer value-based fees wherever possible. This means we charge a flat rate for our services, providing you with certainty and allowing you to plan your finances. We believe this approach offers significant benefits to our clients, reducing stress and promoting transparency. By contrast, it is very difficult to budget for legal fees charged by the hour. You have no way of knowing at the outset how many hours might be required, which further contributes to the anxiety caused by divorce. A contested divorce can be hard to estimate in advance because it is impossible to know how long a court case will last, but we always do our best to indicate the likely time an activity will take and what it will cost you.

Seek the guidance of an expert divorce attorney

Divorce is a challenging time, but understanding the financial implications can help you navigate the process with confidence. At Simon Dippenaar & Associates Inc, we provide expert legal advice and support you every step of the way. If you have concerns or questions about the financial implications of divorce, or just want to have a preliminary discussion in confidence, contact Simon on 086 099 5146 or email

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The information on this website is provided to assist the reader with a general understanding of the law. While we believe the information to be factually accurate, and have taken care in our preparation of these pages, these articles cannot and do not take individual circumstances into account and are not a substitute for personal legal advice. If you have a legal matter that concerns you, please consult a qualified attorney. Simon Dippenaar & Associates takes no responsibility for any action you may take as a result of reading the information contained herein (or the consequences thereof), in the absence of professional legal advice.

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