Know Your Money with Bronwyn Waner and Craig Finch
Know Your Money with Bronwyn Waner and Craig Finch
96. Strategic Approaches to Marriage and Financial Well-being
Unlock the keys to marital financial wisdom with our special guest, Bianca, a distinguished attorney and mediator specializing in divorce. Bianca will guide us through the labyrinth of South Africa's marital regimes, revealing the critical choices between in-community of property, out-of-community of property, and in-community of property with accrual. Her expert insights shine a light on the essential considerations for entrepreneurs and business owners who must navigate these regimes prudently to protect their personal and business assets. Moving beyond idealistic views, Bianca advocates for pragmatic decision-making to prevent conflicts during divorce or death, ensuring everyone's interests are well-guarded.
Join us as we engage in a riveting discussion on the nuances of marital contracts and exclusions, and their profound impact on asset distribution, as well as spousal and child maintenance. Bianca shares her keen understanding of how maintenance obligations can become contentious, especially when weaponized in disputes involving children. Her advice underscores the need for robust legal foresight when entering marriage. This episode is a must-listen for anyone seeking to grasp the intricate financial dynamics of marital relationships and the indispensable role of legal guidance in safeguarding future interests.
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Welcome to Know your Money, where we will explore our relationship with money and how the psychology of it impacts our financial decisions, as everyone thinks about money differently. In our podcast, we'll be presenting a variety of financial topics in an easy to understand way, which we hope will assist you with managing your money.
Speaker 2:Hi, I'm Craig Finch, co-owner of Growth Financial Planning, an independent financial planning practice, and I've been a financial planner since 1986.
Speaker 1:Hi everybody. I'm Bronwyn Wehner, co-owner of Growth Financial Planning. I'm a certified financial planner and our philosophy at our company is to grow yourself to grow your wealth.
Speaker 3:Hi everyone. My name is Warren Grimsley. I'm a director at Rogue Media and help facilitate this wonderful podcast. My main goal here is to try and understand what these two lovely people are saying, so that we can all understand.
Speaker 1:Hello everybody, welcome to Know your Money. This week's episode we have a guest. Bianca from D is for Divorce and the Confidence Coach. She is here just to highlight for us a little bit around marriage regimes and a few other things and her main line of work is mediation and helping clients through divorce and we thought today it would be good to help clients before you have to get there where that would be, so Bea let us know a little bit more about you, welcome.
Speaker 4:Thank you, I appreciate it. Hello, hi everyone. So I am an attorney by profession, yeah, and have gone into mediation practice just because I think mediation is a better option in terms of divorce and my passion project is D is for divorce. It's like an all-encompassing come and find everything you need to know about divorce, right? And I thought today we could chat about marital regimes, because I think we don't preempt divorce, right. Nobody says I do to say I don't.
Speaker 4:But, you have to be smart about the decisions that you make, particularly if you're an entrepreneur or along those lines. Right, you're a business owner. How you get married is really, really important. So we've got three marital regimes in South Africa In-community of property, out-of-community of property and then in-community of property with accrual. Yeah. So the first one is the kind of stock standard If you don't agree to anything else, you will be married in community of property. That's kind of the fairy tale marital regime.
Speaker 2:So that's the default for the country.
Speaker 4:That's the default for the country, sure.
Speaker 2:So in a traditional marriage or you just hook up with the two of you and you don't get the chance to see an attorney like you, then that is called community of property community of property, right?
Speaker 4:so basically, what's yours is mine and what's mine is yours.
Speaker 1:So those are people that go to get married in court kind of thing right.
Speaker 2:That's what your regime will be well, not only in court, if you're married in a church or it's anyone who hasn't had legal advice and hasn't signed a document.
Speaker 3:Anybody who's?
Speaker 4:idealistic about marriage will do in community or property.
Speaker 3:Okay, so most young people.
Speaker 4:No, not actually. I think people are becoming a little bit more aware, because I think people are kind of understanding that divorce actually is becoming the norm, more than long-term marriage.
Speaker 3:Yeah, it's becoming the rule rather than the exception, exactly so.
Speaker 4:The divorce rate is astronomical.
Speaker 2:And there are laws that govern community property are there.
Speaker 4:Sure, I mean, it's all part of the Matrimonial Property Act. Okay, so the government?
Speaker 2:has got a framework for it.
Speaker 4:It does have a framework, but more because it's the default kind of system. It's just everything goes into one pot and then if you decide to get divorced, we split it 50-50.
Speaker 2:But it's not only on divorce, it's on death as well.
Speaker 4:On death as well.
Speaker 1:So how we describe it is that you're seen as one person when you married in community of property.
Speaker 4:Would that be?
Speaker 1:right, yeah, you know. So. If that person has debt, you have that debt. If this person has assets, you have that debt. If this person has assets, you have those assets. And if you get divorced, all of that there's no question has to be divided between each of you. How?
Speaker 4:does it work? There's no question if you argue right. So when you get divorced, you can really structure your divorce however you want to. So you may be married in community or property, but you may then by agreement agree to say well, listen, you're going to take this and you're going to take that, and then there's no issue you can really structure your divorce however you want to provided that it's fair.
Speaker 3:That's what happened with my first marriage.
Speaker 4:Yeah, okay, we were married in community or property and then we had a settlement agreement. Yeah, and so it's only if there's conflict and you go back to court that the courts will then say right, this is what you guys agreed to, this is how it was entered into, and so you're stuck to that.
Speaker 2:But also, as you say, for business. It's important to have an agreement, because then your wife can have her business.
Speaker 4:Absolutely.
Speaker 2:And doesn't affect the community or property. It doesn't affect the assets in the marriage right.
Speaker 4:Sure, so that's if you get married out of community or property, right, then what's yours?
Speaker 1:is yours, and what's mine is mine.
Speaker 4:And if you die exactly?
Speaker 1:The other business partner has no choice, is not liable, but has you in there because now you own it all, sure.
Speaker 2:So, bianca, do you advise people not to go to the community or property risk?
Speaker 4:Absolutely not idealistic. And in a fairytale world and we all want to believe in happily ever after and that's great. But things happen sure and from a financial perspective, it makes more sense, right? If you are somebody who is entrepreneurial and you want to open, you know, establish yourself. It's good to have that separation from your personal life and your business life so that that your wife or husband can sign on their own behalf and it doesn't affect the other person, exactly okay and if you suddenly realize your spouse has got an addiction or kind of you know likes to spend money and incur debt, you're not liable for that debt.
Speaker 2:Okay, so you're obviously seeing the dark side of divorce as well, the realistic side, okay.
Speaker 4:Listen, I think marriage is incredible, but I think you also have to be realistic about your own personal growth, your own financial growth and you safeguard each other actually, and that's where out of community of property with accrual right.
Speaker 2:Should we go there? Sure, let's go there.
Speaker 4:So before obviously traditionally women stayed at home and, you know, raised kids and then they went off and made money and then if a divorce happened, she would be left without anything, right?
Speaker 4:Because, it's out of community of property. So accrual was introduced in the 80s and so what that means basically is you have what's yours and I have what's mine, but whatever we accrued during the course of the marriage, we split the difference right. So if you're worth a thousand and I'm worth 500, you have to pay me 250 rand. It's a very successful marriage, that one, but just to keep the number simple. So accrual was done to safeguard, kind of the stay-at-home moms or whichever spouse.
Speaker 2:Yes, correct.
Speaker 4:Decided to support the other in their business.
Speaker 2:When my parents got married in the 50s, my dad had a business and he got married without accrual. There was no accrual then, yes, but antinuptial, sure, and because he had a business and the risk of that business going insolvent or losing it. When they bought the house, they bought the house in my mom's name, sure, yeah, so that was a good thing. And when they bought the house, they bought the house in my mom's name, sure, yeah, so that was a good thing. But what used to often happen is that the house was bought in the male's name, correct, and because the male had the job and he had the credit worthiness Exactly. And then if he left the marriage, he had the house and the poor wife who looked after the whole family Exactly. That was nothing. That's when the cruel came into being.
Speaker 4:Yeah, just to balance it out right, Because there is value in offering support to your spouse who's chasing a career. Yeah, correct, and that's something that's taken into consideration if you look at things like spousal maintenance kind of what have you done to support that person in their career?
Speaker 2:But the problem is still you can exclude things in the internuptial right Sure In the international contract you get a starting value.
Speaker 4:So let's say you own property before you get married, that'll be included in your ANC and then, upon divorce, those assets are excluded from your total value of your estate.
Speaker 2:So in other words, you could say I own this house. Well, the bank still owns the house but I'm going to exclude the house from the marriage. Yeah, which is not a good thing.
Speaker 4:Which, well, I mean. I think it's necessary to safeguard yourself. People are getting married later and later.
Speaker 3:Yeah.
Speaker 4:So if you've established yourself and you've got properties and your own assets, then it's fine to exclude those things.
Speaker 3:Yeah.
Speaker 4:Because that's what you've kind of accrued for yourself without your partner.
Speaker 1:And how would that affect on death if they accrue those?
Speaker 3:I was about to say, surely you could include those in your will then.
Speaker 4:Yes, your will would then take precedence over that, okay.
Speaker 2:So, but that's a warning in my thing for a spouse who's got a. The one partner is making the money, Sure, and they get married and then that partner says, hold on, are we going to exclude the house? Sure, which you don't want. So if they get divorced, that house is not part of the accrual, Correct. So what should happen is say no the house to this value. There is a starting value yes, yes, but we're saying in this case, excluding it, so it's not even part of it.
Speaker 4:So you'd have to give a value to the asset at this time of conclusion of the ANC right. If it increases in value, then that additional amount forms part of your estate.
Speaker 2:That's fine. But what I'm trying to say is can you exclude it completely? You can, so that's a warning sign. Because if you exclude it, then that means that down the line, 20 years down the line, if that marriage breaks up, the partner who's making the money just says I still have the house, you have nothing, it's not even the growth of that house.
Speaker 4:Sure, but then you can then approach the courts and make the argument that she then contributed to kind of the increase in value, or she's sacrificed her own career, so the courts can make another decision contrary to the marital regime. But then you're in for a fight, right?
Speaker 2:So that's when the lawyers get involved.
Speaker 1:That's when the lawyers get involved, and also, what could they get Like for how long? So let's say, for example, she You're saying spousal maintenance now yes. How long does that and what does?
Speaker 4:it go on. So spousal maintenance is actually really. Maintenance is actually really. It's really difficult to kind of gauge what you're going to get right. The courts take into consideration a couple of factors. So it's the age of the parties, how long the marriage has been in existence for. So obviously the shorter the marriage, the less chance you are going to have of getting spousal maintenance. The reason for the breakdown even though South Africa's got a no-fault system, if you were having extramarital affairs or there was abuse involved, then they'll take that into consideration and also the earning abilities of the party. So let's say you have a woman who worked and then stopped working. She's still able to go back into the workplace. The court will say, okay, I'll give you six months to a year of spousal maintenance. Sure.
Speaker 2:So I think we should chat about that in the next episode.
Speaker 1:Yeah in one of the episodes.
Speaker 2:So the third regime is….
Speaker 4:With accrual, which is what I would recommend.
Speaker 2:Yeah, but the other one is not accrual.
Speaker 4:No, so it's in community of property, out of community of property and then in community of property with accrual. Those are your three, so go for the third option.
Speaker 1:Which is.
Speaker 2:In community of property with accrual, so as the marriage increases in value, both parties share in the value.
Speaker 4:They split the difference between the two estates.
Speaker 2:So why would you have the one without accrual?
Speaker 4:Without accrual is just I don't know. I don't know if you've like a really big business tycoon, are you concerned about gold diggers? I don't know. There's many, there's many options for people and why they would consider that I suppose. So I think probably the more established you are in your business, you probably consider out of community of property.
Speaker 1:Do you have any questions, warren, yeah, as soon as there are children involved in a marriage.
Speaker 3:You talked about spousal maintenance, Child maintenance.
Speaker 4:Yeah, maintenance is a different, so those two factors of maintenance are very different and calculated in a completely different way.
Speaker 1:Okay, so maintenance is an immediate obligation as a parent.
Speaker 3:Yes.
Speaker 4:That's one of the four responsibilities and rights of a parent.
Speaker 3:Yes.
Speaker 4:Whereas spousal maintenance is something you have to go and apply for. But and rights of a parent?
Speaker 3:Yes, whereas spousal maintenance is something you have to go and apply for. But could it be a stealth form of spousal maintenance? If you have two children with somebody and he was a wealthy man, and then you don't work and you look after the kids, you're effectively you're the one spending the money, not the children.
Speaker 4:Sure you are, but the way you calculate maintenance takes into consideration shared expenses between the parent and the children and then specific expenses for the kids.
Speaker 1:Can you do a whole episode on that one too? I think that's perfect. You're going to be here for a few weeks. No, that's nothing wrong with that.
Speaker 4:Listen, maintenance is quite a complex thing. And I think people as educated as anybody may be right when it comes to maintenance and I'm going to say this in a general term. Right, it's not everybody, but men will use money in divorce and women will use children.
Speaker 1:Yeah.
Speaker 4:That's why, you see, our maintenance courts are full of women fighting for money and our children courts are full of men fighting to see their kids.
Speaker 2:And that's how they weaponize one another right. It's really terrible yeah.
Speaker 4:So maintenance is a big thing.
Speaker 2:So, just to summarize this episode, there's the three ways of getting married, right, yeah. And if you don't have a contract, you don't go and see a lawyer like yourself. It's going to be community of property, correct. But there is a law that does govern all those aspects and can help you or not help you, sure. And then the other two are with accrual yes, and out and out. And then the other one without accrual, correct. We don't see that too often, without a cruel no. It's not unusual. There might be a specific reason for that, sure. So most people say what I brought in my marriage yes, is what I take out of my marriage yeah, and what the marriage grows by, we're going to split it.
Speaker 4:The difference between the two?
Speaker 2:Yes, I think I'd like to talk about in the later episodes one of the dangers of those of what you sign. I think you've got to be careful because it sounds all good that you're going to share everything at the end, but maybe it's not like that.
Speaker 4:And a lot of exclusions. Right, Because people exclude pension funds and yeah, you have to be wary.
Speaker 3:I think we'll talk about that as well, it's interesting, isn't it really, that a marriage is effectively a legal contract?
Speaker 4:It's a business, yeah.
Speaker 3:And would you go into business with somebody with all the touchy-feelys?
Speaker 2:and not really take it too seriously. No, exactly, yeah, it's interesting that people do that, though they do. Yeah, yeah, money has no emotions, right?
Speaker 4:And so you can't have emotions about money, and that's why you have to be very calculated about how you enter into a marriage, sorry and kind of how you structure the process.
Speaker 1:Awesome. Thanks, Bea. We will see you on the next one.
Speaker 2:Thank you very much Next Monday. Thanks a lot. Thank you for listening. If you have enjoyed this podcast and would like to subscribe, please visit our website, wwwgrowthfpcoza. The information we have provided in this podcast is our personal opinion. For more detailed information, please discuss your financial situation with a financial planner. You.