There are a number of hidden dangers which could result in your ex–dearly be-loved walking off with not only your house but also your investments, car and life assurance on your death, even if you die many years after your parting of ways.

Grace period

The first danger awaits the divorcee who overlooks reviewing their Will. Our law effectively gives a divorcee a three–month “grace period” from the date of their divorce to get their Will in order.

The Wills Act of 1953 deals with the situation where a person leaves a Will executed before their divorce in which their ex–spouse is an heir or beneficiary. It provides that if a divorcee dies within three months of their divorce, his or her ex–spouse, even if nominated in the deceased’s Will as an heir or beneficiary shall be disqualified from inheriting. This is unless it appears from the Will that the deceased intended to benefit the ex–spouse notwithstanding their divorce.

If the divorcee dies within the three month grace period, the law allows the divorcee’s other heirs nominated in the Will, or failing such nomination, then the deceased’s “intestate heirs” (i.e. new spouse, children or closest blood relatives) to inherit in the place of the nomi-

nated ex spouse.

But if the death happens more than three months after the divorce, the Will is implemented as it stands, even if this leaves the ex–spouse as the rather fortunate recipient of the estate to the detriment of a new spouse, children and other family members.

An example

Mr Splitsville (of course this example could equally apply to Mrs Splitsville) dies five years after a particularly acrimonious divorce. After his death it transpires that he had neglected to revoke his previous Will, executed at the time of his marriage to his ex wife. In this Will he had done the popular “thing” for newly married couples – leaving his entire estate to his beloved wife “Mrs Splitsville”. His family (and in particular any new wife he may have acquired along the way) will be horrified to learn that his ex wife will inherit everything!

And to add insult to injury, if he has over-looked changing his beneficiary nominations on his life assurance policies, leaving his ex–wife as the appointed beneficiary on those, then she stands to receive his life assurance too!

A failure to review the beneficiary nominations on the divorcee’s life assurance policies creates the second hidden danger. The Wills Act does not apply to policies. Here

the nominated beneficiary registered with the assurer at the time of death normally has a contractual right to claim payment of the policy proceeds – even if the life assured drops dead on the court steps just having been granted a divorce from that beneficiary. No grace period applies at all.

The answer is of course simple: as soon as your intentions change regarding who is to receive your estate and life assurance proceeds on your death, you must make the necessary changes to your Will and beneficiary nominations. This is probably sound advice whether you are newly eloped,– “shacked-up”, married, separated or divorced.

The Kids

The next hidden danger catches out divorcees with young children from their ex–spouse. It is created when the divorcee nominates their young child or children as beneficiary of their policies. While this seems logical, the problem is that the assurance company will usually honour your wishes explicitly – possibly too explicitly – by making payment into a bank account opened in the name of the child.

Even if you have been granted custody of your child, it is likely that your ex–spouse remains a co–guardian of the child with you. And there’s the danger:

as guardian of your minor child after your death, your ex-spouse will have virtually full control over that child’s banking account. Your intricately planned and well intentioned testamentary (Will) trust might protect assets such as a house, car and investments left in your Will to your young child.

However, life assurance proceeds do not necessarily pay out through your Will. Your financial advisor can assist you to plan your policy beneficiary nominations so that proceeds payable to young children are protected by such a trust.

The Taxman

The final planning danger for the divorcee is that posed not by their “ex”, but by someone with whom they will have a relationship with “until death them do part” – the taxman. On the death of a taxpayer, their deceased estate is assessed for “estate duty”: the net value of the estate (including the value of life policies and group life assurance payable on death) that exceeds an amount of R3.5m is levied with a duty of 20% (plus an extra 5% on any excess over R30m). However, a deferral of the duty is available to married couples – any assets left to a surviving spouse (including a “common law” spouse) are exempted from duty. This generous concession is not extended to the divorcee