Ten to-dos after a divorce
SORT OUT IMPORTANT FINANCIAL ISSUES AS SOON AS POSSIBLE
1Amending your beneficiaries in terms of your will won’t amend the beneficiaries on your life insurance policies. If you no longer want your former spouse to benefit, you’ll have to amend your beneficiary nomination. There’s no grace period for this so change it as soon as possible. This also applies to retirement funds and group risk benefits. Divorcees have three months from date of divorce to amend their wills and remove former spouses as beneficiaries or executors. If a will isn’t amended and the testator/testatrix dies three months plus after divorce, it’s assumed they wanted to benefit their former spouse. If you become liable for payments your former spouse was liable for, or vice versa, debit order details must be changed. Spouses typically insure their individual assets under one shortterm insurance policy. The insurable interest no longer exists on divorce; each former spouse must get their own short-term insurance. The risk address must be changed when a spouse moves out. Advise your short-term insurance advisor of a change in the risk address, even if the final divorce order hasn’t been granted. A maintenance order favouring a former spouse usually ends at the other’s death. If agreed to, it can continue after the death of the former spouse responsible for maintenance.
Maintenance orders in favour of minor and dependant children usually continue after the maintenance-responsible person’s death. Such maintenance orders form a claim against the deceased’s estate and can drastically reduce a second spouse or other beneficiaries’ inheritance. It should therefore be provided for separately. A court can order the division of a member’s pension interest at divorce.
If this happens to you, there may be a shortfall in your retirement provision; your financial advisor can recommend the best way to address this.
If you were assigned part/all of your former spouse’s pension interest, consult your financial advisor on options and tax implications. Your life/disability cover needs will likely change. Where possible, ownership of existing risk policies must be taken over. Where a policy’s ceded to a former spouse, proceeds remain exempt from capital gains tax. Consult your financial advisor before divorce, to see if policy cession must be made an order of court. The benefits on your existing risk policy may also have to be amended. If you can’t amend these, your financial advisor will help you take out new cover. If you had a joint bank account with your former spouse, open a new bank account in your name only. If you won’t be an adult dependant on your former spouse’s medical aid, get your own. If you intend to join a different scheme, sort it out soon as your existing scheme requires notice. – PSG