New Law created at the Supreme Court of Appeal in one of Hammond Pole’s Divorces.
Hammond Pole Attorneys are ecstatic to announce that the law pertaining to divorce and accrual has forever been changed!
Our very own Senior Associate at Hammond Pole Attorneys, Tania Abbotts, attended to a matter in 2016, whereby the high court ordered that a living annuity cannot be included in a spouse’s estate for purposes of calculating accrual. This meant that the court confirmed that spouses involved in a divorce could purchase a living annuity, and effectively use it to place their Pension Interests, in order to reduce their total assets when it came to assessing whether there was an accrual claim.
South African law has various marital regimes. When parties get married, and elect to get married out of community of property, they can further elect whether to have accrual applicable or not. If it is applicable, this means that the parties will assess their individual estates at the time of divorce, and depending on who has gained more during the marriage, the difference in value will be given to the spouse who has the smaller estate.
When assessing a person’s estate, all assets are taken into account, including Pension Interests which can be made up of Retirement Annuities, Pension Funds, Provident funds, etc. A Living Annuity is a financial mechanism that allows you to place Pension Interests into it, and the Living Annuity will then provide you with a steady income generated from the Pension Interest that you placed into the Living Annuity.
The purpose of a Living Annuity is to, therefore, keep as much of the capital you placed into it, in order to derive a monthly income until you become deceased. As of 2016, the law was unclear whether a living annuity fell within a spouse’s estate as it strictly did not fall within the definition of a Pension Interest.
Tania was involved with bringing this issue before the court in 2016. Unfortunately, in 2016 the court ruled against our evidence and ruled that a living annuity did not form part of a spouse’s estate. The matter was then taken through the various court processes involved with appealing a decision of the High Court. Whilst the matter was dealt with by another firm, the matter is now once again in Tania’s portfolio and on Tuesday, she received confirmation from the Supreme Court of Appeal that they went through the evidence that was placed before the court in 2016, and overruled the 2016 decision.
The Supreme Court of Appeal thus has forever changed divorce law as they confirmed our case, presented by Hammond Pole Attorneys, and forever determined that a living annuity can no longer be used to diminish one’s estate as the income stream derived from the living annuity (the value that a spouse will receive by getting a monthly income) will always form part of a spouses estate for purposes of determining accrual.
This is a great victory not only for our client, but it is a victory for future divorces in ensuring that fairness and equality are applied throughout. No longer can one use a loophole to prejudice their spouse for purposes of diminishing their asset using a living annuity.
Contact Hammond Pole Attorneys today, if you are going through a difficult time of separation or need to service of a legal representative for your divorce case. Email us at: TaniaA@hammondpole.co.za