Life and Death Financial Decisions

21/02/2015 14:55

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 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.  (Most attorneys will recommend 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).

 

According to Jacqui van Marcke, Legal Business Development Manager at Momentum, a note can be made on the institution’s system, but they cannot enforce anything.  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. 

 

A Life Insurance company cannot stop the owner of the policy from changing the beneficiary if he is the 100% owner.

 

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

 

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.

In the appellate division case of Kruger v Goss & another (603/08) [2009] ZASCA 105, the judgment handed down on 21/9/09 is a warning to estate planning practitioners and attorneys.

 

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.

 

Should you have any questions regarding securing your maintenance or if you would like to take out life insurance please don't hesitate to contact us!  Our Specialist Divorce Financial Planner will gladly assist you.

 

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