Life and death financial decisions.

 
 

Should your ex-spouse die will you receive your maintenance?

Should your ex-spouse pay you rehabilitative maintenance or any other maintenance such as spousal or child maintenance that has been stipulated in your Divorce Order, it is of utmost importance that you secure it by taking out an insurance policy on your ex-spouse's life of which you are the owner in case he/she is disabled or dies? Your ex-spouse can suggest a cession on an insurance policy but we’ve come across numerous cases where incorrect policies with no death benefit were ceded to ex-spouses that resulted in a zero claim.

 

Accepting in your settlement agreement that you are the beneficiary on an existing policy is a bit risky. You can ask the insurer to make a note on the institution’s system, but they cannot enforce anything, there is a contractual agreement between the contracting party and the insurer.  So if the life assured dies and the owner has changed the beneficiary nomination, they will have to pay out in terms of the beneficiary nomination. Alternatively, if the owner has removed all the beneficiary nominations the proceeds will pay to the deceased estate.  Therefore, in these cases, the only remedy that the ex-spouse would have is to institute a claim against the deceased estate. Yes and this will be costly and time consuming. A life insurance company cannot stop the owner of the policy from changing the beneficiary if he is the 100% owner.

 

Goodbye emergency cash, goodbye wealth and hello debt!

·       The only way to avoid beneficiary changes is when you are the owner of the policy and your ex-spouse the life assured.

·       Your ex can pay the premiums and once the children are financially independent you can cede the policy back to your ex.

·       It is even smart to pay the premium yourself if your ex won’t pay it.

·       Group life cover will not work, when your ex resigns the cover falls away

If you are still in the process of divorce, see to it that your Divorce Settlement Agreement is drafted in such a way that this can be enforced.  Should you already be divorced and don't have such financial protection in place, you can either approach your ex-spouse or you'll have to go to court again.

 

So here is the bad news.

 

In the appellate division case of Kruger v Goss & another (603/08) [2009] ZASCA 105, the judgment handed down on 21/9/09 is huge red flag to all divorcees receiving rehabilitative maintenance!

In the divorce trial the husband had been ordered to pay his soon-to-be former wife, a monthly amount of “rehabilitative maintenance” for 5 years. The Court Order was made to this effect. After 3 years the ex-husband (the payer of the rehabilitative maintenance) died. The receiver of this maintenance claimed from the deceased’s estate an amount equivalent to the ‘unexpired’ period (i.e. the remainder of the term).

 

On appeal, her claim was dismissed. “Rehabilitative maintenance” was held to be a specific kind of maintenance generally and the common law position was that the ‘duty of support’ (maintenance) ends when the marriage terminates.

 

This was not a claim under the Maintenance of Surviving Spouse Act 27 no 1990 and it could not have been granted by the Court in terms of the aforementioned legislation. (a)