Divorce Financial Planning

Financially educating yourself as a woman will empower you



As a Financial advisor it is my absolute passion to educate Women in Finances.  I cannot tell you how many times when I interview a couple I have to hear “my husband handles all the finances” and “I know nothing about our finances”.  This is the horrifying truth, because we all get married with the “happy ever after” picture in our head. The husband being the “breadwinner” and provider handling all finances, as we were taught by our parents.

Unfortunately no matter how much you fight or pray for your marriage things are not always in your control and sometimes it leads to the unthinkable, divorce.

According to Statistics South Africanfindings released in February 2016, divorce rates have gone up and instances of marriage have declined.  The findings show that 150 852 people had wed in civil marriages in 2014, 3062 had customary marriages and 1144 were married in civil unions.  In the same year, 24 689 people got divorced, this is 3, 4% higher than 2013, and mainly initiated by the female partner!  In addition, 51, 7% of divorces were initiated by wives, while only 34, 4% were initiated by husbands.

So according to statistics in most cases of divorce the wife initiates it, another reason why it is in your best interest to understand the family finances and your own need well before negotiations begin. 

I want to share a true story with you about a recently divorced client I met.  Grace’s (not her real name) husband took care of all the finances during their marriage and she was a housewife taking care of the House and the children’s daily activities.  She did not have any information on the Value of their Assets and Liabilities and she did not bother to find out.

Grace initiated her divorce with her husband as he verbally abused her and she fell into depression.  She decided to take the first step to divorce as they went for marriage counselling on numerous occasions, but he did not want to co-operate.

Grace felt guilty because she initiated the divorce and trusted John (not his real name) in dividing their Assets fairly as they were married out of community of property with accrual.  She also wanted the divorce to be over and done with as soon as possible.  Accrual is a way to ensure that both spouses in a marriage gain a fair share of the estate once the marriage comes to an end. He compiled a list of all their Assets, and John assured Grace that all Assets were listed which they had built up together during their marriage when he presented it to their lawyers.

After the divorce settlement, Grace had a rude awakening.  She discovered that their joint savings account had been depleted over the last few years of their marriage.   Grace also realised that John (now her ex-husband) never included his share in a very successful company that he invested in while they were married.  This asset should have been divided between them during the divorce settlement, but he got it all.

John had a definite advantage over Grace during the negotiations.  He had the knowledge and used it to control the financial negotiations in his favour.  Choosing to let John take control, and with Grace being passive and not asserting her rights during the negotiations, cost her dearly.

This is not unusual as I meet a lot of families where one spouse is responsible for the family finances.  However, when you decide to divorce, it becomes of utmost importance that the spouse not involved in the finances, educate themselves and find the help of a knowledgeable financial advisor to assist during the process.

It is not only the family Assets that are of importance, but also knowing what your own personal needs are, and to have a clear understanding of what your  income and expenses would be in future, splitting up.

As you prepare for negotiations make sure you complete these 3 steps:

  • Determine your living expenses.  Calculate and work on a budget that firstly will give you a “comfortable” lifestyle and then the bare minimum to cover only basic needs.  Make sure you take inflation into consideration.  Include Children school fees and aftercare fees or the cost of a child minder, Medical aid cost (on whose medical aid will the children be), Rental cost/Bond cost, Electricity and water, Food and grocery, Spending money for the children, Short term and long term insurance cost,  etc.
  • Look at your total income from different income streams and examine how they stack up against your expenses?  Do you need to find means of extra income?  What is your plan and how are you going to achieve this?
  • Annalise family assets.  Determine the value and ownership title of family assets.  Include Investments (find out what is the latest value from the company), Property (let an estate agent do a property valuation), Group benefits of employees as well as Stock options and pension plans (Your financial advisor will be able to assist you here in understanding what your spouse have in place at his/her work).

It is also important to determine the cost basis of all assets.  Will there be any Capital gains tax on any assets, and to make sure that the cost is divided equally.

To protect both parties, ensure the divorce settlement includes settlement provision as well as future financial expenses and responsibilities for example:

  • Who will be responsible for Tertiary education cost and for what percentage or amount?
  • Which spouse will carry the children on his or her medical aid?
  • Which spouse is responsible for property transfers?
  • Life Insurance and Disability Cover should be considered on both spouses to assure financial responsibilities are met in the event of sudden death or disability. 

Once the divorce is completed, review your financial plan and ensure the following is up to date and reflects your current situation:

  • Change Beneficiary designations on Retirement funds/annuities and Life insurance.
  • Comprehensive Estate planning
  • Make a “clean break” from your spouse so that you are not dependant on them anymore and ensure you have your own medical aid, own rental contract, Financial advisor and Policies, etc.
  • Change your Will and the beneficiaries nominated.

In Summary, it is of vital importance that both parties make sure they are well informed of their financial situation before entering into divorce negotiations.

Divorce is difficult for both parties and a fair division of assets and supplemental income payments can be more easily attained if both spouses know their needs and the value of the family assets, and have done research on future expenses and costs.

Posted by CoParenting

Read more

Divorce Quotes



"You are surrounded right now by unlimited opportunities disguised as insurmountable problems."