As we age, life brings new challenges and changes. One such challenge which is increasing worldwide for many senior citizens over 50 years old is divorce, often referred to as “gray divorce.”
Navigating divorce is always difficult, but the challenges are especially daunting in later stages of life when ending a lifelong partnership. If you are currently considering a divorce or going through a gray divorce, it is important to keep the considerations outlined below in mind.
In this article we will provide guidance on how to make the gray divorce process as painless as possible with reference to the Divorce Act 70 of 1979, which is the applicable legislation dealing with divorces in South Africa.
UNDERSTANDING THE PROCESS
Gray divorce can be more complex than divorce at a younger age due to several factors, including the length of the marriage, accumulated assets, retirement accounts, and potential health issues.
Should you be thinking about instituting proceedings to get divorced, in terms of the Divorce Act, you need a reason to get divorced. A divorce can take place if:
- You can prove to a court that you and your spouse can no longer live together and there is no chance of resolving your differences as there has been an “irretrievable breakdown” of the relationship;
- One of the spouses is mentally ill or continuously unconscious.
Applying for your divorce – the 2 types of divorces are:
- Uncontested or unopposed divorces; and
- Contested or opposed divorces.
Uncontested divorces are easier because both parties agree to the divorce and the divorce settlement. Should your divorce be contested and complicated, this means that it will be highly likely your divorce could take a few years to be finalised and you would incur high legal fees.
MARITAL REGIME AND PROPERTY DIVISION
On divorce, your property will be divided according to the marital regime which you entered into with your partner when you got married. For example, if you were married in community of property, everything will be divided equally.
If you were married out of community of property, subject to the accrual system, property owned prior to a marriage will usually remain with the sole owner. Due to the fact that older couples are more likely to have accumulated a significant amount of assets over the years, the division of these assets on divorce can become a complicated exercise. A key problem is where one spouse is not sure of all assets the other spouse holds or has acquired, such as cryptocurrency or assets held in a trust.
It can be more challenging to pinpoint exactly which assets were acquired before the marriage and which assets were acquired during the subsistence of the marriage. Disputes may also arise regarding the value of marital and non-marital assets with each divorcee trying to claim that which belongs to them.
Another important consideration is that if you are married out of community of property without the inclusion of the accrual system, you will not be entitled to a share in the assets of your partner’s estate. This is problematic if you were the homemaker and supported your spouse’s career over many years, and now should you institute divorce, you will not be entitled to your spouse’s success and growth in wealth.
Section 7(3) of the Divorce Act generally provides the divorce court with a discretion when dealing with a divorce for a marriage out of community of property, to transfer assets from the financially stronger spouse to the financially weaker spouse. This section was inserted into the Divorce Act to protect women who were married out of community property and contributed towards the growth of their husbands’ estates while their own was not growing. This section therefore allows the financially weaker spouse to be allocated a portion of their stronger spouse’s assets that were accumulated during the marriage, because they are ordinarily prevented from sharing on divorce due to being married out of community of property. This section now applies to all marital regimes and the court is able to exercise this discretion accordingly.
SPOUSAL MAINTENANCE
Spousal maintenance refers to the financial support paid by one spouse to the other either as directed by a court order or agreed upon during divorce proceedings. It’s crucial to note that spousal maintenance is not automatic upon divorce; it is contingent upon agreement or court order.
In cases where spouses cannot come to an agreement, the court considers various factors outlined in Section 7(2) of the Divorce Act to determine if spousal maintenance is appropriate. These factors include the financial status of each party, earning potential, financial needs, duration of the marriage, standard of living, and any relevant behavioral issues contributing to the marriage breakdown.
There are different types of spousal maintenance arrangements:
- Permanent or Lifelong Maintenance: This is paid regularly, typically monthly, from the divorce date until either party passes away or circumstances change significantly. The court can adjust or end the maintenance order if circumstances warrant it.
- Rehabilitative Maintenance: This is provided for a fixed period, often when one spouse needs support to transition into the workforce after dedicating time to caregiving responsibilities during the marriage. It helps them acquire training and become financially independent.
- Token Maintenance: In cases where immediate financial support isn’t feasible, a nominal amount like R1 per month may be ordered. This serves as a placeholder, allowing the recipient to seek a modification if circumstances improve for the payer or financial needs change for the recipient.
- Interim Maintenance: This is interim maintenance provided during divorce proceedings, granted through specific applications in either the Magistrate’s or High Court. In the High Court it is known as a Rule 43 application and in the Magistrate’s Court as a Rule 58 Application.
Ultimately, whether spousal maintenance is awarded depends on the unique circumstances of each case, with the goal often being a clean break subject to a fair and equitable resolution for both parties involved.
The unfortunate reality with divorces in general, but especially in gray divorces, is the fact that homemakers often get the short end of the stick when going through a divorce. It may be the case that a woman who has dedicated her life to taking care of the home and children whilst the husband went out to work, would not have many prospects to enter the job market after a divorce at that age. The law does however recognize the need to protect people in this position and spousal maintenance arrangements can help a financially weaker spouse with covering their costs.
FINANCIAL CONSIDERATIONS
Financial implications are often a significant concern in gray divorce. It is essential to have a clear understanding of your financial situation, including assets, debts, and retirement accounts. You should work with a financial advisor or lawyer to develop a post-divorce financial plan that considers your current needs and future goals. Additionally, consider consulting with a tax professional to understand the tax implications of dividing assets and spousal support.
LEGAL FEES
When someone is considering getting divorced, often one does not consider the exorbitant legal fees which accompany an opposed divorce. Not only can a complicated divorce go on for many years, but so do the legal fees. It is important to advise that a huge chunk of your retirement and life savings can be spent towards legal fees. If you are the financially stronger spouse, your partner’s legal team may obtain a cost contribution and cost order against you to cover the legal fees of your spouse if they are not in a financial position to afford them.
MEDIATION
In all divorce proceedings, mediation must be considered. Divorce mediation is a voluntary settlement method chosen by married couples seeking divorce. It allows couples to plan their future in a rational and respectful manner, aiming to reach a personalized agreement that considers their family dynamics, financial situation, and other relevant factors. An impartial and experienced mediator facilitates this process, offering guidance and advice to the parties involved.
In many cases, mediation or collaborative divorce can be a less adversarial and more cost-effective alternative to litigation. These methods focus on open communication and reaching mutually beneficial agreements, which can lead to a smoother and less stressful divorce process. The unfortunate reality with mediation is that it is often not successful especially when a divorce is contested. The success of mediation depends on the attitudes of the parties.
LEGAL GUIDANCE
Navigating gray divorce requires a thorough understanding of complex legal issues. A divorce attorney with experience in gray divorce can provide valuable guidance and advocate for your best interests throughout the process. They can help you understand your rights, negotiate settlements, and ensure that your future is safeguarded. Especially at this stage in life, it’s crucial to ensure that you’re financially prepared for the years ahead in retirement.
John Smith, a Cape Town based litigation lawyer and family law expert at John Smith & Associates advises that “the party who is taken by surprise should have sessions with a psychologist.” This is because a gray divorce can be extremely traumatic for couples who have spent years of their life together and planning their future together, to then have to go through such a drastic change.
LEGAL ISSUES TO CONSIDER
RETIREMENT AND PENSION FUNDS
Furthermore, retirement plans and the division of pension funds can become a complicated matter for gray divorcees. Many 60 plussers may be in a position where retirement is around the corner or have already retired and, with a gray divorce consideration needs to be made of any changes that would possibly be made to retirement plans.
It would often be the case where the elderly couple have decided to retire together in one house sharing costs. A gray divorce is therefore a big spanner in the works as this may drastically impact the divorcees’ ability to retire. In some drastic cases, a divorcee may be forced to work beyond their planned retirement age and in those cases where one divorcee was completely financially dependent on the other, the divorcee may be compelled to now re-enter the workforce.
In addition, with a gray divorce, retirement accounts which are regarded as a joint asset would now be subject to division after the divorce. The divorcee who was the breadwinner would be impacted by this significantly as their retirement would be cut significantly. The divorcee who would have been financially dependent on their spouse would also now have to possibly re-enter the job market as their plan to live with and share in the retirement of the spouse would not come to realization.
WILLS AND ESTATE PLANNING
It is also prudent that couples going through a gray divorce, update their estate planning documents such as trusts and Wills. These documents may have to be updated to reflect their current wishes and their ex-spouse may have to be removed as a beneficiary.
The Impact of Divorce: the Law of Succession, Inheritance and Your Will
According to Section 2B of the Law of Succession Amendment Act, divorce impacts a testator’s Will, but only for a limited time and only concerning a particular beneficiary. A Will is a document created by a testator, outlining the distribution of their assets after their death.
When a testator gets divorced, their Will remains valid unless and until it is amended or revoked. However, divorce does affect the distribution of assets to a spouse. For example, if a testator has named their spouse as a beneficiary in their Will, the divorce will automatically revoke that spouse’s entitlement to the bequest (gift of property) for a specific period.
Section 2B states that the revocation of the spouse’s entitlement to the bequest will only apply for a period of three months after the divorce becomes final. After this time, the spouse’s entitlement will be restored unless the Will has been amended or revoked.
You must note that this rule only applies for a limited time.
This three-month period allows the testator to review their Will and make any necessary changes if they wish to do so. If the testator does not take any action during this time, the Will remains unchanged, and the spouse’s entitlement to the bequest will be restored.
The Law of Succession Amendment Act, (No. 43 of 1992) is a South African law that deals with the legal process of inheritance and the distribution of a deceased person’s assets.
EMOTIONAL TRAUMA
We recommend that the party that is taken by surprise by the divorce should have at least 1 or 2 sessions with an experienced psychologist. It is an extremely difficult time to properly grasp the emotional hurt going on and be in the right headspace to think clearly and rationally about the divorce and your best interests. It is of utmost importance that divorcees take care of their health when they are going through a divorce.
CASE STUDY – THE HIDDEN TRUST
Background:
John and Mary, both 61, have been married for over 40 years. John is a successful entrepreneur who built a substantial business empire over the years. Mary dedicated her time to managing the household and raising their children.
The Marriage:
As they approached retirement, John became increasingly distant, often traveling for business and spending more time alone. Mary noticed changes in their finances, with accounts she used to manage now handled solely by John.
Discovery of the Trust:
During the divorce proceedings, Mary’s attorney uncovered a trust that John had set up years ago. The trust held significant assets, including properties, investments, and a portion of the business, all of which Mary was unaware of.
Legal Battle:
Mary claimed that John had hidden these assets in the trust to avoid sharing them in the divorce. John argued that the trust was created for legitimate estate planning purposes and that Mary had never shown interest in their financial affairs.
Resolution:
The court ordered a forensic investigation, a costly expense, to investigate the trust and John’s financial dealings. The investigation revealed that John had indeed hidden assets in the trust to shield them from the divorce settlement.
Outcome:
In light of the evidence, the court ruled that the trust assets were marital property and should be included in the division of assets. The corporate veil of the trust was therefore lifted. Mary was awarded a significant portion of the trust assets, allowing her to maintain her standard of living post-divorce.
Lessons Learned:
This case highlights the importance of transparency in marriage and the potential consequences of hiding assets during divorce proceedings. It also underscores the value of legal counsel in uncovering hidden assets and securing a fair settlement. Please note however that piercing the corporate veil is not always successful.
LOOKING AHEAD
While divorce can be a challenging and emotional process, it can also be an opportunity for a fresh start. By prioritizing your well-being, seeking legal and financial guidance, and exploring alternative dispute resolution methods, you can navigate gray divorce with greater ease and move forward with confidence into this new chapter of your life.
In conclusion, gray divorce presents unique challenges for seniors, but with the right approach and support, it can be a manageable and even empowering process.
Consulting with a divorce attorney who specializes in gray divorce can provide clarity and guidance tailored to your specific situation.
This article was written by MDW INC who can be contacted below:
FOR ENQUIRIES:
Meyer de Waal
MDW INC meyer@mdwinc.co.za
021 461 0065 & 083 653 6975
Daniela Papa
daniela@mdwinc.co.za
021 461 0065 & 083 783 8494
Devedine Armstrong
devedine@mdwinc.co.za
021 461 0065 & 076 902 4027
CLICK HERE TO READ MORE – Gray Divorce, A disturbing trend, Part 1
CLICK HERE TO READ MORE – Gray Divorce– Part 2 – a divorcé’s perspective.
