How To Protect Your Assets In A Divorce In South Africa

 

Divorce can be both emotionally and financially overwhelming, especially when it comes to protecting your assets. In South Africa, the marital regime in place determines the division of assets. However, legal measures are available to help secure your wealth and achieve a fair settlement. So, how can you protect your assets in a divorce?

The best answer to how to protect your assets in a divorce in South Africa includes having an antenuptial contract (ANC), maintaining meticulous financial records, setting up a legally sound trust, and ensuring that excluded assets remain separate. Courts can overturn attempts to hide assets, so proper legal planning is essential.

If you plan to get married, the best time to secure your financial future is before the wedding. However, even if you’re already married, there are still steps you can take to protect your wealth. Understanding your marital regime, using trusts correctly, and keeping accurate records of your assets can help you protect your assets in a divorce. Let’s explore these strategies in detail.

 

Antenuptial And Postnuptial Contracts

In South Africa, the legal framework governing marriage significantly impacts how assets are divided in a divorce. Here’s a breakdown of the different marital regimes and how they affect asset protection:

Married in Community of Property

• If you didn’t sign an antenuptial contract before marriage, your default marriage regime is married in community of property.
• This regime means that all assets and debts are shared equally between spouses.
• In a divorce, everything is split 50/50, regardless of who earned or owned what before marriage.

 

Married Out of Community of Property: With an ANC (Antenuptial Contract)

• This marital regime allows couples to keep their assets and debts separate.
• You can set up your ANC with or without accrual:
  • Without accrual: Each spouse keeps their assets entirely separate, and there is no sharing of growth in wealth.
  • With accrual: The increase in each spouse’s estate during the marriage is shared at divorce, but assets declared excluded in the ANC remain protected.

 

Understanding the Antenuptial Contract (ANC)

• A well-drafted ANC is essential for protecting assets.
• It must clearly specify excluded assets, such as retirement annuities or properties, to ensure they do not become part of the communal estate.
• Any proceeds from the sale of excluded assets should also remain separate to prevent them from being included in the accrual.

 

What About Postnuptial Agreements?

• If you’re already married in community of property but want to protect your assets, you can apply for a postnuptial contract.
• This process involves converting your marriage into an out-of-community of property arrangement through a court application.
• However, the court must be convinced that the change is fair and in the best interest of both spouses.

 

Keeping Proper Records is Crucial

• You must carefully document all assets excluded in the ANC.
• If an excluded asset (e.g., a property) is sold and the proceeds are used to buy a new asset, you must maintain a clear paper trail to prove that the new asset remains excluded.
• Mixing excluded assets with joint finances can cause courts to rule that the asset forms part of the communal estate.

 

Setting Up A Trust: Protect Your Assets In A Divorce

Another way to protect your assets in a divorce is to have a properly structured trust, but you must use it correctly. Courts are increasingly scrutinising trusts to prevent them from being misused to hide assets in divorce cases.

How Trusts Work

• A trust is an independent legal structure designed to manage assets for specific beneficiaries.
• It is managed by trustees, who control the assets according to the trust deed.
• Since the assets belong to the trust and not the individual, they may be protected from division in a divorce—but only if set up correctly.

 

Using Trusts the Right Way

• Establish the trust before marriage: Courts are more likely to recognise a trust as legitimate if it was created before the marriage rather than as an attempt to shield assets during divorce.
• Ensure independent control: If a spouse has complete control over the trust assets, courts may classify it as a sham trust and include the assets in the divorce settlement.
• Keep proper records: Assets transferred into a trust must be accounted for correctly, and there must be a clear distinction between trust and personal assets.

 

How Courts Handle Trusts in Divorce

• Piercing the trust veil: If a spouse uses a trust as a personal financial tool while still benefiting from the assets, courts may rule that the assets belong to the spouse and should be included in the divorce settlement.
• Sham trusts: If a court determines that a trust was created solely to hide assets from a spouse, it can disregard the trust and divide the assets accordingly.
• Alter ego trusts: If a spouse controls a trust as personal property, the court may include the trust’s assets in the matrimonial estate.

 

Settlement Agreements: Protecting Your Assets In Divorce

You can use your settlement agreement as a crucial tool for protecting your assets during a divorce. Instead of leaving decisions to the courts, this legally binding contract allows you to safeguard your property, investments, business interests, and financial future through mutual agreement.

By negotiating a fair and structured settlement, you can:

• Retain control over how assets are divided rather than relying on a court’s ruling
• Shield valuable assets like homes, businesses, and retirement savings
• Minimise financial losses by avoiding costly litigation
• Ensure long-term stability by securing clear financial arrangements

 

Key protections include:

• Clearly defining asset ownership to prevent disputes
• Securing business interests to avoid forced liquidation or division
• Outlining debt responsibility to protect against unwanted liabilities
• Ensuring financial independence through fair maintenance terms

 

A well-crafted settlement agreement provides clarity, security, and financial protection, helping you confidently move forward while preserving what matters most.

You must carefully plan to protect your assets in a divorce, particularly when choosing the proper marital contract and using legal tools like trusts effectively. The best way to ensure your financial security is to seek professional legal advice before marriage or as soon as possible during the divorce process. You can safeguard your wealth and avoid costly legal battles during a divorce by keeping precise records, maintaining proper financial separation, and following legal guidelines.

At Burnett Attorneys & Notaries, we help protect your assets in marriage and divorce. Our divorce attorneys can draft prenuptial and postnuptial agreements, ensuring clarity in asset ownership. If you’re divorcing, we assist in negotiating fair settlements. Let us safeguard your financial future—contact us today