Old Mutual On The Money
Old Mutual On The Money
Choosing the right type of marriage contract for you
Marriage is a big step, but choosing the right type of marriage contract for you is just as important. Our Financial Education Programme Manager, Thabo Hollo, chats with Phumelelo Simelane, MD of Simelane Attorneys, about the differences between marriage in- and out-of-community property and how the accrual system works. This podcast is a must for anyone about to say “I do”.
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Thabo Hollo 00:00:05
Good afternoon. Thank you for joining us “On The Money”. And once again we're talking about the subject of marriage and finances. Now the focus is what happens post the marriage. Marriage in itself can be very difficult. But imagine if we have to go through divorce. What are the implications beyond just having a divorce? What about maintenance? What about maintenance for the kids? What about the assets? What about spousal maintenance? And today we're going to focus specifically on spousal maintenance. And with me today I have Siphumelelo Simelane. Thank you very much for joining me. But tell me a little bit about.
Siphumelelo Simelane 00:00:50
Thank you for having me. Thank you for having me. My name is Siphumelelo Simelane. I currently practice and run the firm of “Simelane Attorneys”. We are situated in Sandton, Rivonia. I have a keen interest in family law, which is what we are discussing today, and commercial and corporate other work. But my keen interest really, really is divorce. I found out the other day that my true caller name is Siphumelelo, divorce attorney.
Thabo Hollo 00:01:17
Wow.
Siphumelelo Simelane 00:01:18
So I do a lot of the divorce work. I usually act for mothers or women and we run quite a successful, I must say, dispute resolution practice. Primarily focusing, as I said, family law, corporate and others type divorce.
Thabo Hollo 00:01:37
Before we even land there, just lend me here. Let's talk about marriage first, before the divorce, before maintenance, before we even get there, the types of marriage regimes and in brief, what impact do they have on your finances?
Siphumelelo Simelane 00:01:53
So in South Africa you get married in three ways. The first way is unfortunately the default position, which is what's called in community of property. What is yours is mine, what is mine is yours. So this also includes all of the assets and all of the liabilities. Usually we don't want this one because what you do on the other side, affects the side. So if we have a gambling problem and they come to fetch a house or they come to attach a TV, they are attaching from the joint estate. So that's an in community of property marriage. We're at an age now where no one should be married in community of property. It's just there's too much knowledge around it. Then there's one that's called an out of community of property, excluding the accrual, which basically means there are two distinctive estates. You can do with what you want to do with your assets and your liabilities. They'll never affect your party, the other party vice versa. So this one is very good because what you do on the other side doesn't affect us. We're able to mitigate the risk and we're able to ensure that at least, you know, ourselves are protected financially. Our kids are protected financially. And the last one is with the accrual, which basically means, the accrual basically means whatever your commencement value is at the time of the marriage is then comes at the end of the marriage. In South Africa, marriage is ended by two ways, divorce or death. So we then do a calculation. Remember, lawyers are not good with math. So the simple calculation is as follows. If you started at zero and I started at zero, at death or divorce, you worth R100, I'm worth R50. We then entitled to the half difference of the growth accrual, which basically means 100 minus 50 gets to 50 divided by two gets to R25. So the spouse whose estate has accrued the least has in law R25 that he can enforce entitlement in law that they can get. It's not in assets. So it doesn't mean you can exchange it for a house or a car. It's purely monetary. And you have R25 in law that you can actually enforce against the other party.
Thabo Hollo 00:04:02
Right. But things happen. Things happen. It indicates. And now we're looking at each with scarf eyes and now we get to the stage where it says, “No, no, no.” You go your way, I go my way. But then the complication then comes to issues around maintenance. The topic for today that I want us to focus on specifically is around spousal maintenance. Just in brief, what is spousal maintenance and what are the different types of spousal maintenances that we find in law in South Africa or generally?
Siphumelelo Simelane 00:04:40
So spousal maintenance is basically the obligation a party has to upkeep or for upkeep of the other party with lesser financial means. So the easiest way to understand it is to explain the different types of spousal maintenance.
Thabo Hollo 00:04:56
Please do.
Siphumelelo Simelane 00:04:57
We have a maintenance that's called “Rehabilitative maintenance.” So this is essentially to try and get the party back up on their feet. Usually they were the housewives. They're taking care of the kids. They are not allowed to do work. The husbands are saying, “We want you at the house. You must always be available.” So that one is called rehabilitative. So we're trying to rehabilitate them and get them to a point where they're able to stand on their own two feet.
Thabo Hollo 00:05:24
Hang on. But it can also happen to be a house husband right?
Siphumelelo Simelane 00:05:28
Of course.
Thabo Hollo 00:05:29
Spouse means?
Siphumelelo Simelane 00:05:31
I should have clarified it. So it's not only entitled to men, it's entitled to both men, female, it's entitled to both even same sex civil union recognition of the Customary Marriages Act. So it's across the board. Its aim is to just get the party who had lesser financial means to a point where they are able to stand for themselves. And that's why it's never lifelong or in perpetuity. It's three years, it's four years. You know, we have to look at it case by case.
Thabo Hollo 00:06:06
So there's an end time, there's a define time?
Siphumelelo Simelane 00:06:08
Yeah, that's correct. So usually they'll say three years, four years, five years but I've really seen anything about five years. It's really just to get the spouse into a position where they're able to fight for themselves, whichever it is. It might be female, might be male, whichever spouse, you know, was not in financial control or power. So that's what you get called rehabilitative maintenance.
Thabo Hollo 00:06:33
Rehabilitative maintenance.
Siphumelelo Simelane 00:06:34
Then you get what's called lifelong maintenance or maintenance in perpetuity, which is. It's a very tricky one, but it's difficult to prove. So this is usually the one where we've been married for 40 years. I'm at a point where I don't have any education, I'm unemployable. I've taken care of the kids, I've raised the kids. I've been the house executive. I want maintenance in perpetuity, meaning I want maintenance up until I die, up until my demise or up until I remarry.
Thabo Hollo 00:07:07
Hang on. So it ends if I die?
Siphumelelo Simelane 00:07:12
Yes.
Thabo Hollo 00:07:13
Or if I remarry?
Siphumelelo Simelane 00:07:14
Yes.
Thabo Hollo 00:07:15
So that's when.
Siphumelelo Simelane 00:07:17
That's when the obligation is distinguished. So up until I remarry or I die.
Thabo Hollo 00:07:24
All right.
Siphumelelo Simelane 00:07:24
But again, we're finding cases where people have been divorced, people have found partners, lifelong partners, but they're not getting married.
Thabo Hollo 00:07:34
Because it still continues.
Siphumelelo Simelane 00:07:35
Because obviously it would distinguish that monthly obligation. There's way to deal with it. But that's usually the scenario. But like I said, we'd have to look at the age, the financial positioning of both parties to be able to even think about making that claim.
Thabo Hollo 00:07:51
Okay, the third one?
Siphumelelo Simelane 00:07:52
So there's a third one. It's not really used in South Africa, but it's called “Token maintenance”. It's usually reserving a ride where you say you want R1. But you not sure what the future holds for you. So you're just giving yourself an opportunity or a space where if the circumstances would change so drastically, you'd be allowed to approach the court again to say, can I at least have R5000 maintenance? We don't see it a lot in practice, but it is there.
Thabo Hollo 00:08:18
But it does exist.
Siphumelelo Simelane 00:08:19
It does exist. So then the last ones, which is what's called a “Rule 43” in the high court. So if we're litigating in the high court, it's called a “Rule 43”. It's called “Interim maintenance”. If you are litigating in the lower court, which is the regional court, it's called the “Rule 58” or “Rule 53”, I might be mixing it up, but the whole purpose of it is interim maintenance. So divorces generally take time. And what we have seen is usually, again, usually the people with the financial muscles are the husband. So you can't litigate against someone who has what we call an unending financial pocket who can bury you with attorneys, bury you with advocates, who can threaten to say, if you leave here, where will you stay? I'm going to take the kids out of school. They go, do you understand the threats? Like I said, it happens both sides. But usually the case is more husband than wife. So the courts developed something beautiful, which is this “Rule 43”, which is interim maintenance pending the divorce outcome. So if we know that a divorce can take five to six years, and I know as a party to the divorce that I won't manage for five to six years without his financial support, I instruct my attorneys for a “Rule 43”. Yes, it does dealt with other things like kids and stuff, but on the financial side, it's spousal maintenance. So we are saying to the court, court, please order this man to pay us R30 000 a month up until the divorce is finalized. Please allow this man to make a certain vehicle available to us. I still want to drive my Porsche for the next five years, not next five years up until the divorce is finalized. The tires must be maintained, it must be serviced. Petrol. This must continue paying the mortgage bond rates levies. So this is all dealt with in a “Rule 43”. And the big facet upon “Rule 43” is also, remember you, especially if you're in a position where you are housewife, house husband you are looking after the kids, you don't have funds to litigate against your husband on the same footing. So this is also where you ask for a contribution towards your legal costs.
Thabo Hollo 00:10:35
Can I challenge that “Rule 43” or “Rule 58” in a case of a lower court?
Siphumelelo Simelane 00:10:40
Of course.
Thabo Hollo 00:10:41
As a house husband say, look, the magistrate, you've offered me 30c , but actually I'm looking for 50c . Or can I say, as a working husband nor magistrate, this person is not entitled to even a penny out of this, based on the “Rule 43”, what are the grounds of granting a “Rule 43” and can it be challenged?
Siphumelelo Simelane 00:11:04
Of course. So usually a “Rule 43”, I should have explained this, because the divorce takes five years, a “Rule 43” was specifically enacted to deal with it now. So if we do a “Rule 43”, we are in court now quicker, in the next three months, six months, because we can't be in court until 2030, you won't survive. So when you bring out “Rule 43” application, you need to prove to the court that you are in his financial need. You are his dependent, so to speak. He pays for the car, he pays for the house. So you need to make out and set out a case to the court to say, “Court, I am destitute. He needs to continue paying for the kids because he's been doing this.” So the aim of a “Rule 43” is to actually maintain the status quo up until we divorced. So of course it can be challenged. And this is where we need to be a bit more realistic and practical with clients. If you are driving a polo, you can't now come and say you want a Porsche.
Thabo Hollo 00:12:02
I want a Porsche out of the “Rule 43”.
Siphumelelo Simelane 00:12:04
Out of the “Rule 43”. That's when judges start saying being unreasonable. We must advise clients properly. But also same breath. If you, during the duration of the marriage, were giving me R30 000 a month to maintain the home, you can now come and say R10 000, do you understand? But ultimately, the decision rests with the court. The courts look at the age of the parties, they will say, “No man, why don't you go get a job, for example? You are in a position to obtain employment. You are employable.” They will look at the pay disparity. Yes, you might be earning a salary, but you're earning R10 000 versus someone who brings home half a million rand a month. There's a pay disparity. So these are some of the circumstances the courts do look into.
Thabo Hollo 00:12:49
So can this thing be abused, for instance, yes, you got a “Rule 43” granted. And we say perhaps a reasonable time should be around about five years. Can I drag this for the next ten years? As somebody who's receiving the spousal maintenance out of the “Rule 43”, does it ever happen?
Siphumelelo Simelane 00:13:08
Yes, of course. They abuse it. So usually when you're in recipient of a “Rule 43” order, you'd want to milk this order as far as you can. Let me separate it like this a “Rule 43” is actually called an “Interlocutory application”, which means it's an application. It's something between. Something bigger. Remember the big thing? We're getting divorced. That's the big thing. That's the main action. The “Rule 43” is just there in the middle. So what often happens is once a person has a “Rule 43”, they start dragging their feet. So the main divorce takes time. But there are measures and there are ways where we can actually push the main divorce. So we get to a point where the “Rule 43” is distinguished, because the “Rule 43” will only be distinguished once there's a final divorce order.
Thabo Hollo 00:13:58
Can't I go to court, for instance, and say, hang on, she is dragging this thing unnecessarily, and it's simply because she has enjoying the benefits. Is there any way that I can then approach the court for relief? And if I can, what are the grounds?
Siphumelelo Simelane 00:14:18
So two ways. In the main action, the divorce action. Let's say the madam, as you put it, needs to produce documents so we can go on to the next stage. But they're not producing documents. They chuck, they diving, they running away. You bring an application to compile. So then that means they must produce a document within ten days. And if they don't, you can actually strike out their defense, or you can move closer to the date. So, yes, there are ways. But under “Rule 43” side, it can happen that you're running a thriving business. All of a sudden, COVID hit. We saw this a lot with COVID. You're now applying for funds to keep. You know, you're making zero. So then you build, you bring what's called a “Rule 43:6”, to tell the court “Court, I understand there's an order that obligates me to make payment per month.” But looking at the financial circumstances right now, there's been an exceptional change in my circumstances. Allow me to reduce or allow me to discharge or. Look at me now. I was making hundred thousand, but I'm making one rand. I can't even fend for myself. So, yes, there are ways to go about it.
Thabo Hollo 00:15:23
So this “Rule 43”, if I understand perfectly, can also be challenged. It's not a perpetual arrangement. As you said, is an interim arrangement pending. You said interlocutory pending. The bigger case. This is what you can get. And how often do we see that in court?
Siphumelelo Simelane 00:15:46
It happens all the time. So the only time you won't see a “Rule 43” or when it won't be brought out is when both parties are financially savvy or financially capacitated.
Thabo Hollo 00:15:58
All right.
Siphumelelo Simelane 00:15:59
Because then there's no need for me to bring a “Rule 43”. But remember, I'm primarily speaking about a “Rule 43” against the backdrop of spousal maintenance. It deals with other things. It deals with kids for example. You've now moved out of the house. How are we going to sort out the kids? Are you going to come see the kids every alternate weekend? Are you going to come see the kids holidays, birthdays, Father's day, Mother's day? It also deals with issues like that. And like I said, legal contribution. It's a big one. You might get an order that says, pay me R15 000 a month. But how am I going to find my litigation going forward in the main action? Because it's expensive. And that's when clients or applicants in the roof of the often ask for R100 000 deposit towards so they can pay their own attorney, so they can litigate with you on the same footing. If you can pay your ten 100,000 Rand, I should be able to pay my attorney R100 000.
Thabo Hollo 00:16:59
In the same, that's where we get into. You will actually get money to litigate against yourself under “Rule 43”.
Siphumelelo Simelane 00:17:08
So the court wants to put both parties in a similar position. Otherwise, there's a big discourse. There's one who can afford an attorney, an advocate incentive. Then there's one who simply can't even who simply can't afford to do anything, who can't pay an attorney, can't pay an advocate. They are often left destitute. They must approach legal clinics or legal aid. When you are litigating against someone who can afford the bigger firms, the big five, as we say.
Thabo Hollo 00:17:36
I'm interested still in the perpetual one. Circumstances change, what are the rules in terms of changing the perpetual spousal maintenance?
Siphumelelo Simelane 00:17:50
So perpetual spousal maintenance again, it's difficult to prove, but if you as being awarded a perpetual maintenance, right, and you as the other party would want to distinguish or extinguish that, you'd have to show the court exceptional circumstances have changed on your side. It's usually maybe loss of income, maybe you're in a position where you are hospitalized, you are unable to function anymore. I want to make the example and say you've lost a limb, but you'd have to show exceptional circumstances to the court that you are unable anymore to do this. And then you'd have to bring what's called a variation application where you are saying to the court, yes, there's a divorce order. It says I must pay ‘X’ up until I remarry or I owe my demise. But court, I can no longer wait for that. I'm in a situation right now where, yes, I was earning 100, I'm earning R1000, I'm on pension, I've lost my business, I've been liquidated, for example. So my businesses have been liquidated. I personally have been sequestrated. I can't manage to do this. And the courts would then often look at it and see and maybe grant and distinguish the order.
Thabo Hollo 00:19:06
All right. Let's look at different scenarios. Initially, when we started the conversation, we said there's different types of marriage regimes and marriage contracts and all these have different impacts in terms of finances. Can we link spousal maintenance to any particular, for instance, if we married out of community of property without any accrual? Can I still sue for spousal maintenance?
Siphumelelo Simelane 00:19:37
Yes, of course.
Thabo Hollo 00:19:38
What are the circumstances? What needs to be proved? What are the cases in?
Siphumelelo Simelane 00:19:40
100%. So remember, spousal maintenance flows directly from the obligations of the Divorce act and the Matrimonial Property Act. It has nothing to do with whether how we are married or how our marriage is constituted, nothing. It flows from the obligation. So if there was an obligation during our marriage, wherever.
Thabo Hollo 00:20:01
So it's almost like dependent irrespective of what type of marriage. I can still sue for spousal maintenance and get it through, irrespective of how you measure.
Siphumelelo Simelane 00:20:16
So you end up finding cases where there are no issues in dispute patrimonially, meaning there's no issues around who owns the house, who owns the car. In fact, we are in agreement with the kids. The kids can stay with you, they can stay with me. I'll pay for the kids 100%. The only issue that's left is spousal maintenance.
Thabo Hollo 00:20:40
Wow.
Siphumelelo Simelane 00:20:41
So spousal maintenance does not flow from the marriage that's been constituted or the marital regime. Nothing. It has nothing to do with that. It's like its own life, it's its own person that springs up and it needs to spring up.
Thabo Hollo 00:20:53
But then is there any cut off? For instance, we started this diverse process. There's a bit of a “Rule 43”, and we get to a space where now we divorced. And at that particular point, there's no proof that I might need spousal maintenance. But then in the short term, then I need maintenance. Can I go back retrospectively and sue for spousal maintenance? Or it's done, it's finished, it's cut off. You're on your own.
Siphumelelo Simelane 00:21:31
So I'll explain it in two times in two ways. So let's say we settle, which basically means we are settling with a divorce as a whole. We're in agreement that we are going to sign and settle and say, the kids go with you, you take the blue couch, I take the red couch, etc. And in that agreement we say, “No spousal maintenance is claimable by either party.” You cannot go retrospectively down the line and claim for maintenance because now they would say, you agreed that there was no spousal maintenance that would be capable.
Thabo Hollo 00:22:07
And post the divorce order. Let's say, for instance, there's an order already, it's not a settlement. It's not something that we've agreed. I've gone to court, he didn't pitch up. And eventually I get almost like a default judgment out of it. But the default judgment does not include the spouse. Can I go back and say, hey, you know what, I want to appeal this. I want to include then the spousal maintenance.
Siphumelelo Simelane 00:22:31
So you would have to make out and set out a case for variation, which is a very high threshold. You would have to essentially convince the court that at that point, I was ill advised, I was not aware that I could claim spousal maintenance, it has only come to my attention now, “Court, can we include a provision in the order of spousal maintenance?” But like I said, that is a very high bar to meet.
Thabo Hollo 00:23:00
Just in closing, what are the things, what are the pitfalls that we should look for either of the party in terms of the spousal maintenance? What are the requirements? What are the pitfalls? What are the things that we should be aware of before asking or paying for spousal maintenance?
Siphumelelo Simelane 00:23:16
So I think, firstly, in any divorce situation, we need to try and approach it amicably as possible. It's difficult. You would swear when you are litigating, that these people once profess their love for each other, because things have changed so much that at odds, you would swear. So I would say, especially with the minor kids involved, I would say, let's start with trying to amicably resolve the divorce through a round table discussion, which is what attorneys usually try to do. Because remember, once you go full guns blazing, your legal bill goes up, the children are affected. The first thing that I would say we must try and look for, try and curtail the issues in dispute. Sometimes we're not fighting over kids. There's no fight over kids. But because of pride, and I want to show you, we're not fighting over kids, but you know that the mother or the father was always responsible for the kids. Why must we start now? So that's the first one. And then I would say, in terms of “Rule 43”, what you need to look out for is pay disparity. It's easy to bring a “Rule 43” application. We can do it now, we can do it tomorrow, but we need to have fact on our side. We need to really look deep into our own finances and not dream of our mouth. A judge once made a remark to my client to say, this is not a shopping list. A “Rule 43” is not a shopping list. It's to try to just maintain the reasonable status quo pending the divorce action. So I would say we must be very realistic with ourselves. I think the last thing that I would want to touch on is what happens when a “Rule 43” is not complied with. Because remember, “Rule 43” is a court order. This is when, if you don't comply with the “Rule 43” and it says you need to pay R15 000 and you've not paid R15 000. And this is when contempt of court comes in.
Thabo Hollo 00:25:04
So you're in contempt of court because you broke the court order.
Siphumelelo Simelane 00:25:06
You broke the “Rule 43” order. And that's when, usually now there's an application for contempt. And to prove contempt is very easy, you need to show that there's a “Rule 43” order. You know the “Rule 43” order. You've seen it and there's been non-compliance. You haven't paid. Then the owner shifts from me to you. You must then prove to the court that “No court, I was not in Willsville default because my business circumstances changed. Maybe I was not aware of the order or something, but that's what parties must want.” Even “Rule 58” orders, it is fully legally enforceable.
Thabo Hollo 00:25:44
Absolutely.
Siphumelelo Simelane 00:25:45
It does not matter if it's the high court. It does not matter if it's the magistrate court.
Thabo Hollo 00:25:50
Thank you. Love is a good thing. Weddings, marriages, absolutely fantastic. But remember, all of these have a financial implication. Go there and get yourself armed. Spousal maintenance is a real thing. Find out more about it. Thank you.