Maintenance is the legal obligation to fund someone else’s living expenses. A duty to maintain is the automatic consequence of both marriage and parenthood. It applies irrespective of whether you are married ‘in community of property’ or ‘out of community of property’ and relates to both children and adopted children.
The legal duty to maintain survives a divorce, so the end of a marriage doesn’t spell the end of a husband’s duty to support his ex-wife and children. Bear in mind though that the same duties rest on the wife, so a financially successful wife may find herself subject to a maintenance claim from her husband.
Who pays maintenance, and how much, is really a function of each spouse’s financial means and requirements. You and your children are entitled to be maintained at the standard of living to which you were accustomed during the course of the marriage (this may include luxurious expenses), but only to the extent that the financial means exist to maintain this lifestyle after the divorce. This is often not the case because the splitting of households often leaves both spouses financially strained.
The Court will decide whether someone has to pay maintenance by looking at the financial situations of each spouse. The spouse with spare money will be ordered to pay money to the other spouse who does not have enough money to sustain their standard of living. So when making a claim for maintenance it is critical that you include every last expense that goes into maintaining your lifestyle and that of your children. Bank account and credit card statements are a useful resource for gathering this information. Also give careful thought to future expenses such as education, medical and dentistry requirements and insurance. In parallel with this process, you should also focus on all possible sources of income that your husband may have. Don’t ignore retirement savings, assurance policies, commissions, investments etc.
Courts treat the welfare any children as the first priority. Whilst other factors may come into play in determining the maintenance payable to a wife, in determining how much maintenance should be paid to support a child, the Court does not take into account the behaviour of the parents. It is only interested in protecting the interests of the child. As a result, a parent is still obliged to pay maintenance even if the other parent has remarried, is involved in another relationship, prevents him/her from seeing the children or has had further children with another partner.
Three things to remember during a divorce:
- Get a good lawyer: The assistance of an experienced and respected divorce attorney is essential in any divorce in which there are substantial assets at stake. Do your research – try find an attorney based on a referral, rather than an advertisement, and discuss fees upfront.
- Be careful with retirement savings: Your husband’s retirement savings could be a valuable source of future financial support but make sure this is dealt with properly in your divorce order and thereafter. A very common mistake is to require the husband to cash in half of the retirement savings so that they can be paid over to the wife. This may seem like an appealing option because it gives you instant access to cash but drawing on retirement savings in this manner plays into the hands of the taxman. Not only is the withdrawal of the savings treated as taxable income in the wife’s hands, you also lose out on the tax-free lump sum amounts you would otherwise receive on retirement. It is far better to have your share of the retirement savings transferred into your own retirement fund. You could set up a ‘preservation fund’ which would then receive the transfer tax-free and, if you need to, you will still be able to make withdrawals from the preservation fund in the future, even if you haven’t yet reached retirement age.
- Use after-tax figures to calculate your divorce settlement: You may think your financial future is secure when you’re presented with what looks like an attractive settlement proposal but always remember to take account of the tax consequences of the divorce settlement. The amount you receive after tax may be significantly less than you expected, leaving you to fund the shortfall. The sale of assets could trigger a capital gains tax and the realisation or division of other revenue sources could also have significant income tax implications. These factors should be taken into account so that you have a full picture of what your after-tax disposable income will be.
Protecting yourself and your family after the divorce:
Based on you ex-husband’s earning potential, you’ve negotiated a divorce settlement that secures the financial future of your children. Your ex-husband will be paying for their education, medical and living expenses. But what if he dies?
Divorce settlements often require the ex-husband to take out a life assurance policy in favour of his ex-wife. Make sure that you are properly protected by this mechanism. It is not enough to be the named beneficiary on the policy – your ex-husband could strip you of your financial security at any time by simply changing the policy beneficiary. To avoid this, it is essential that you are named as the owner of the policy, with your ex-husband named as the life assured and payer of the policy.
Tying up the loose ends can make all the difference after a divorce. Leaving your husband as a signatory on your bank account, or as the nominated beneficiary of your investments, could have devastating consequences. Even more important is to remember to complete a new last will and testament. This requires more than just removing your husband as a beneficiary of your estate.
Unless you make proper arrangements, money left to your children could fall under the indirect control of your ex-husband, in his capacity as a legal guardian of your children. This can easily be avoided if your will specifies that any money left to your children should be held in a trust until your children reach a suitable age to inherit. The trust funds are then controlled by your executor (someone you trust), who ensures that the money is properly spent on maintaining your children.
Having just come through a divorce, the prospect of spending more money on legal fees to have a new will drafted is obviously not appealing. This shouldn’t prevent you from dealing with this essential step after your divorce. You could try exploring some of the more affordable legal solutions that are now available. For example, websites such as www.lawunlocked.co.za offer fully customised wills (which can include the suggested testamentary trust in favour of your children) for less than 10% of what a law firm would charge you.
Whatever path you follow, the key to any successful divorce is to know your rights, to understand the consequences and to act on objective, measured and professional advice.
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