If your future depends on it, you should know about it.

The lockdown has probably challenged most marriages. Some have been broken. Divorce attorneys are already dealing with the fall out as they report up to a 20% rise in divorce applications. The current economic climate will make these divorce negotiations more difficult and perhaps more bitter.

At Foundation Family Wealth an area of expertise is helping people navigate the financial aspects of divorce. Although we have helped couples through divorce successfully, we are most often consulted by women when they are faced with divorce, specifically, high-stake divorces. There’s a pattern to the pictures: The family has led a beautiful lifestyle, often involving private schooling for the children and luxury holidays, frequently to overseas destinations. Because of the husband’s challenging career, the wife has relinquished hers, either fully or whatever is left looks more like a hobby.  This situation is more typical of those marriages where both parties are currently past midlife and the traditional husband and wife roles dominate.

Through the years, I have noticed trends – perhaps unsurprising yet, distressing trends. Trends that are quite specific to women. They are not the only trends, but they are what I write about today. If you are a woman, depending on your husband’s financial future for your own, you should take note.

Truth #1 You are unlikely to afford the same lifestyle after divorce

It is with shock that many women learn that they may not be able to continue in their accustomed lifestyle after a divorce. Even if they want the divorce, which is more often the case after midlife, they typically have to sacrifice the life they have known: the life which they helped to build when they supported their husband’s career and took care of the countless unpaid jobs required to manage that lifestyle.

Very few divorces end in the continuation of the same lifestyle for both parties. It is logical that it is more expensive to run two households than one, especially if those household expenses included overseas holidays and holiday homes. It is highly unlikely that there will be enough money to fund those for both parties. It is likely that the wife without the high paying job, will no longer be able to afford a home that resembles a family home and won’t be able to afford the holidays they had before. The husband can often continue a similar lifestyle after divorce because he is likely to continue earning well.

Truth #2 If you don’t know what you’re entitled to, you may not get anything

One would assume that people would know what their marital contract involved but that’s not my experience. So, a tip: if you’re thinking about divorce, read your marital contract to understand what you’re entitled to before you even consider it.

In South Africa, there are three types of legal marital regimes. These are otherwise known as marital property systems and include marriage in community of property; marriage out of community of property with accrual; and marriage out of community of property without accrual.

Many people getting divorced now were married out of community of property with accrual.  This type of marriage contract stipulates that property acquired during the marriage (referred to as accrual) should be divided equally between spouses.

Recently we helped one of our families through a divorce, where the wife had never worked due to her husband’s frequent job relocations. All the assets were registered in his name and we uncovered that they were married out of community of property.  This means that she was not entitled to anything, other than maintenance. Ensure that you do not become this wife. Fortunately for her, she married a reasonable man (although incompatible) and with our help, they could come to a fair agreement.

Truth#3 If you don’t know what you own, you may not get half either

This kind of scenario often has two aspects to it.  The first is that the wife is not interested in the financial management of their family – other than perhaps managing the household budget – and so she never understands the picture. Sadly, when it then comes to the application of the marital contract, specifically the division of property and assets, she has no idea what she is entitled to. Therefore, it becomes a guessing game.

The second is the act of willful concealment on the part of the husband.  In my experience, many of the men in these high stakes divorces never intended to share their wealth equally with their wives. Some have never considered their spouses equal partners in their marriages, whilst others start arranging their affairs in an opaque manner when they start considering divorce.

Truth #4 Women often sign their own financial future away

The trust structure is a common tool used to syphon funds away from accrual or marital property. The initial intent with a family trust may be honourable and even part of a family financial plan but it can turn on the financially illiterate or uninvolved spouse. Frequently, the wife is even a trustee of the trust and will have signed documents about which she was not properly informed or did not enquire enough about.

Once funds are in a trust structure, it can become easier for a wife to be side-lined or even completely alienated from those assets. Once in a trust structure, the assets are no longer part of the marital property. Although it is not impossible to claim a share of those assets, it is a complicated area of law and it can become extremely costly to claim your part of those assets.

Truth #5 The one who controls the money, controls the outcome

Our law requires that there should be full disclosure of assets from both parties. However, in practise, some men know that they hold the power because they control the money. They can then control the outcome by cutting off money to the wife while the divorce proceedings drag on. Frequently, they will have made up a number which they believe their wives are entitled to, they could survive on or that they are prepared to sacrifice towards their freedom. They can make it impossible or unpleasant for a woman to survive or move forward until she agrees to his terms.

Even in society, there is still this idea that the money is his, which he can choose to share. However, the accrual contract states that whatever is accrued in the marriage should be shared equally. It is not up to the main breadwinner to decide how generous he feels.

This type of financial abuse may have occurred throughout the marriage or only start once negotiations turn to money. The children are often used as negotiation pawns too, as are sentimental assets like the family or holiday home. Interim maintenance can also be used as a bullying tactic:  here the husband stops or threatens to stop paying maintenance for his wife or children during the divorce proceedings.

Truth #6 It will cost to claim your share

If a woman does not know what her husband’s assets are worth, it will be extremely costly to find out: either through legal costs, mental wellbeing or future financial ruin. Many women are unwilling or unable to go through lengthy legal battles to uncover all their husbands’ assets. Divorce can strip both parties from their mental stability. I have seen strong, successful women reduced to tearful insecurity by the grinding divorce process.

Sometimes, the assets are not willfully hidden, but just so complicated that it will take a long time to unravel, which can be costly and unpleasant too. Forensic and accounting experts may be required to uncover the assets. These lengthy and complicated battles may require mental tenacity that isn’t accessible during most divorces. Mental energy that could rather be spent focusing on your new life or the wellbeing of your children, is instead spent on fighting to get what is legally yours.

Truth #7 You may not qualify for maintenance either

So far, I’ve described the challenges for women in getting a fair share of the accrual. But, even when the assets are fairly shared, there is rarely enough to provide a woman with a similar lifestyle for the rest of her life. A woman may claim maintenance from her husband to survive. However, if you have some form of education but have never worked during your marriage, the courts may only award you a few years of maintenance  – called rehabilitative maintenance, this affords you enough time to ‘get back up on your feet,’ usually no more than two years.  It’s nearly impossible, though, for a middle-aged woman to establish a new career in a few months. Even more so, when she is also navigating post-divorce adjustments and steering children through the trauma.

What can you do about it?

Although in theory, the South African legal system seems fair to women who have made raising children and building a life and a home their main priority, the reality can be grossly unfair. The hard-hitting truth is that if as a woman you are relying on your husband’s job and wealth creation ability for your financial future, then you need to take steps to protect your and your children’s financial future. It is not difficult. Just stay involved and informed. We recommend the following:

Get involved in running the banking or the household budget. Not only will you become better informed about how the family’s budget operates, you will also know where the money is flowing.
Sit in on the meetings with the financial advisor or the banker or make sure you get reports of those meetings.
Keep a record of assets that accrue during your marriage. A good practise is to put together a list of assets and liabilities every year.
Approach it from a risk perspective. What will happen if your husband dies?
If you are considering a divorce, consult a financial planner and an attorney before you do anything else. It is important to understand what you will need to know and how much financial security you will need to make this transition. Many people regret getting divorced when they finally realise the financial implications.

At the same time, do not underestimate yourself or the resilience and strength you possess to build a new life if you must walk away from a damaging marriage. No amount of money is ever worth your health or wellbeing.

At Foundation Family Wealth, divorce and transition planning is one of our areas of expertise and strength. Consult us if you need help through a divorce. We have developed unique planning methodologies and services exactly for these difficult transitions.