Know how love and mar­riage can af­fect your fi­nances

Pretoria News Weekend - - PET CARE -

ALTHOUGH more and more women are en­ter­ing for­mal em­ploy­ment, it seems that many of them do not take charge of their fi­nances, par­tic­u­larly if they are mar­ried or in a long-term re­la­tion­ship. Fi­nan­cial well-be­ing cov­ers a broad spec­trum of is­sues, but here are some ba­sic tips.

If you are get­ting mar­ried, ob­tain le­gal ad­vice about the dif­fer­ent mar­i­tal regimes. Each regime has con­se­quences, and you need to choose a regime that is best suited to your and your fu­ture spouse’s cir­cum­stances. Although you can change your mar­i­tal regime after get­ting mar­ried, this has to be done ac­cord­ing to pre­scribed le­gal pro­cesses and can be ex­pen­sive.

If you are al­ready mar­ried, make sure you un­der­stand which mar­i­tal regime ap­plies to your mar­riage and what the le­gal con­se­quences are.

You can be mar­ried in com­mu­nity of prop­erty, where the as­sets of both spouses are com­bined in a joint es­tate, out of com­mu­nity of prop­erty with­out ac­crual, where the as­sets are com­pletely sep­a­rate, or out of com­mu­nity of prop­erty with ac­crual, where only the as­sets ac­cu­mu­lated dur­ing the mar­riage are shared. The lat­ter two op­tions re­quire an ante-nup­tial con­tract.

Mar­i­tal regime.

If you were mar­ried in South Africa and your hus­band was not a South African cit­i­zen at the time, do not as­sume that South African law will ap­ply to your mar­riage.

Our law pro­vides that a hus­band’s domi­cile at the time of the mar­riage de­ter­mines the mat­ri­mo­nial prop­erty sys­tem. Your domi­cile is es­sen­tially the place you re­gard as your home, and to where you re­turn after trav­el­ling.

You can be domi­ciled in Coun­try A but travel abroad and even live in

For­eign-cit­i­zen spouse.

an­other coun­try with­out los­ing your domi­cile if you re­gard Coun­try A is your home. If, for ex­am­ple, your hus­band was domi­ciled in Eng­land and you were mar­ried in South Africa, English law will ap­ply to the mar­riage. In the ab­sence of an ante-nup­tial con­tract, the mar­riage will be out of com­mu­nity of prop­erty, not in com­mu­nity of prop­erty, as it would be if he had been domi­ciled in South Africa.

Make sure you and your spouse have a will. It seems that women in par­tic­u­lar do not draft a will or un­der­stand what the im­pact will be if their part­ner or spouse dies with­out leav­ing a will that pro­vides for them.

If you die with­out a will, your es­tate will be dis­trib­uted in terms of a “for­mula” set out in the In­tes­tate Suc­ces­sion Act.

It is par­tic­u­larly im­por­tant to have a will if you are mar­ried and have

Im­por­tance of a will.

chil­dren. If you do not, your spouse will in­herit R250 000 or a child’s share, which­ever is greater, and the chil­dren will in­herit the rest. (A child’s share is cal­cu­lated by di­vid­ing the es­tate be­tween the to­tal num­ber of chil­dren and the spouse of the de­ceased.)

How­ever, it is not enough to have a will; you need to en­sure that it is valid and up to date. To be valid, a will must have been drawn up in terms of the for­mal­i­ties pre­scribed in the Wills Act. The ba­sic re­quire­ment is that you sign the will in the pres­ence of two com­pe­tent wit­nesses, who must also sign the will. The will must re­flect your cur­rent per­sonal and fi­nan­cial sit­u­a­tion.

I saw first-hand the prob­lems that oc­curred when a man who was mar­ried in com­mu­nity of prop­erty failed to up­date the will he drew up be­fore his mar­riage be­queath­ing his en­tire es­tate to his sis­ter.

Our law pro­vides for a “grace pe­riod” of three months after your divorce. If you die in that pe­riod and your will still names your for­mer spouse as your heir, he or she will be as­sumed to have pre­de­ceased you and any in­her­i­tance to him or her in your will sim­ply falls away, un­less you ex­pressly state that he or she will in­herit, even if you are di­vorced. Once the three-month grace pe­riod has passed, the as­sump­tion falls away, which means your ex-spouse will in­herit what­ever you’ve left to him or her in your will.

Your will on divorce.

If you do not get mar­ried or en­ter into a civil union, make sure you un­der­stand the le­gal con­se­quences when your part­ner dies.

Although our law ex­tends many ben­e­fits to life part­ners who do not marry or en­ter into a civil union, there are cer­tain ar­eas where ben­e­fits do not ap­ply. For

Liv­ing to­gether.

ex­am­ple, if a part­ner in such a re­la­tion­ship dies with­out a will, the sur­viv­ing part­ner is not en­ti­tled to in­herit any­thing. It is es­sen­tial for such part­ners to draft a will or en­ter into an agree­ment to deal with the dis­tri­bu­tion of their as­sets.

Make sure that you un­der­stand your in­come and cap­i­tal needs in the event of your death, or that of your spouse or part­ner.

One of the big­gest in­vest­ments most cou­ples make is their home, and this is usu­ally funded by way of a mort­gage bond, which may be based on the con­tri­bu­tions of both par­ties. If you died and your spouse was heir to your es­tate, your heir could ap­ply for a new bond, but if he or she was not fi­nan­cially in a po­si­tion to pay the monthly re­pay­ments, a bond would not be granted. In that case, the bank would in­sist on the bond

Death of a spouse.

be­ing set­tled be­fore the heir in­her­ited the prop­erty. The re­al­ity is that most peo­ple do not have enough cash in their es­tate to set­tle a mort­gage bond, with the re­sult that the ex­ecu­tor will have to sell the house.

It is also im­por­tant to con­sider what hap­pens on the death of the non-bread­win­ner spouse or part­ner. We of­ten find that only the bread­win­ner’s life is in­sured. The re­al­ity is that, if the non-bread­win­ner dies, some­one will have to be paid to per­form the tasks that the non-bread­win­ner did, and this could lead to fi­nan­cial strain. The above mat­ters are a few ex­am­ples of why it is im­por­tant that you seek ex­pert ad­vice when plan­ning your fi­nances. Ronel Wil­liams is the chair­per­son of the Fidu­ciary In­sti­tute of South­ern Africa.

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