Till death (or divorce) us do part
Marriage is supposed to be forever. But with pressures of life, lack of communication, or infidelity, many people who eagerly said “I do”, end up saying “I don’t anymore” when the marriage ends up in the divorce court.
The consequences are often devastating, both from an emotional and financial perspective. Where there are children involved, issues of custody, child support and visitation rights add to the stress. Women often are granted custody of minor children. Assets are be divided up and both parties have to start over. It is here where women are often vulnerable, because of decisions they have made during the marriage, which at the time seemed the right thing to do.
A joint bank account
Having money in a joint account gives you little control over how money is being spent and whether there are bad credit records being built up. Each spouse should have their own bank account and manage their own expenses. Once you are single again, it might be very difficult to obtain credit, for example, if there was a bad credit record on a joint bank account that you held. You may also find that a spouse can clean out a joint bank account whist the divorce is in progress, leaving the other spouse severely financially compromised.
Who pays for what?
In many households, working wives seem to pay for the household expenses such as groceries, domestic help and school fees, whilst the husband pays for the assets – policies, property, cars, etc. If the marriage dissolves, the wife has little to show for all the years that she has invested financially in the partnership.
The marital regime
A marriage between two people is a legal contract, and if that marriage ends, the contract ends, and the terms of this contract will determine how the assets are allocated. In South Africa, two main marital regimes exist, namely in community of property with profit and loss, and out of community of property, with or without the accrual system. If no Ante Nuptial Contract is entered into before the marriage, the automatic regime is in community of property with profit and loss. No-one gets married planning to get divorced, but decisions that you make before walking down the aisle, can have tragic financial consequences for you later.
Tips for financially surviving a divorce:
- Avoid doing battle in the courtroom. Try to come to an agreement between yourselves, and communicate as far as possible, and not via lawyers, as this runs up cost overnight. The longer the divorce is drawn out, the more costly it is and this erodes your assets.
- You may have to accept a reduction in lifestyle, as you move from two household incomes to one. Be realistic and accept your new circumstances, and spend only what is coming in. Avoid going into debt, as this will come back to bite you in the future. It’s a new start and be positive about it.
- If you have minor children, your child support will be critical. Whilst you are negotiating the terms of your divorce agreement, consider having your spouse take out separate life and disability cover, which will protect this income to you, if something should happen to him in the future.
- You need to belong to a good medical scheme, so that your children will be financially secure if you became ill, disabled or died, and you need to have long-term savings for their future education, and your retirement. If your husband did most of the financial planning prior to your divorce, you need to have your own financial plan drawn up, taking your new circumstances into account.
Divorce is an opportunity to start afresh. It brings challenges, but also opportunities. Make the right financial decisions and you will always be secure, no matter what curveball life throws at you.