Warning to rich South Africans who are married
South Africa’s legal landscape is undergoing a massive shift as the government looks to streamline marriage laws, which poses several risks to rich South Africans and their wealth planning.
Kirsten Smit, Advisory Partner at Citadel, said that the reforms are a reminder to the high-net-worth (HNW) and ultra-high-net-worth (UHNW) individuals that wealth planning is essential.
South Africa has seen an increase in divorces, rising by 8.9% in 2024, which is the latest data from Statistics South Africa’s Marriages and Divorces report.
“As divorce and family laws evolve, affluent families need to prioritise the protection of their wealth by putting guardrails in place in terms of their assets,” said Smit.
“It’s not taking anything away from the marriage; it’s about cultivating open communication from the very beginning and understanding that every marriage will end in an exit one day.”
New court developments emphasise the rigorous and fair application of the accrual system, with particular emphasis on uncovering assets that have been moved into a trust during the divorce trial.
The move to a trust aims to reduce the accrual in the estate, with the courts ruling that these assets must be accurately included in the accrual calculation.
“The courts and attorneys will now have to make sure that the accrual system really is applied fairly and that assets can be recovered from trusts when applicable,” said Smit.
Interim relief measures also allow a spouse to apply for temporary maintenance, child-related relief or a contribution towards legal costs while divorce proceedings are ongoing.
She noted that these measures can make maintenance expectations difficult to manage and that they need to be implemented with great care.
Smit noted that for families seeking to protect generational wealth, a well-structured Antenuptial Contract (ANC) is the most effective way to ensure fairness regarding assets brought into a union.
Accrual can then be included or excluded, depending on circumstances. Smit noted that written clauses in an ANC should also ring-fence and exclude inheritances from future accrual claims.
“Under South African law, inheritances are automatically protected and kept separate from your spouse, but the exact mechanism depends on the terms of the ANC you choose,” said Smit.
Get it right from the start
Smit noted that the efficacy of a family trust as a wealth preservation tool depends on its initial design and the quality of its oversight.
She said that many affluent individuals overlook the necessity of a well-structured trust deed that can evolve with changing legislation, which needs to be structured correctly from the start.
She recommended independent trustees who are aware of family dynamics and legislative changes, and can tweak guardrails if needed. Careful beneficiary designation and succession planning are also key.
A common oversight among wealthy families is allowing their financial structures to become overly fragmented, creating a high level of complexity that often needs to be untangled to unlock efficiency.
“People tend to think that complexity is a good thing, but when you create more elegant, manageable solutions, you are truly adding value, transparency and fairness to everyone’s lives,” she said.
“As South Africa’s divorce laws and the courts’ interpretations of them continue to evolve, the message to HNW and UHNW families is clear: proactive planning and regular reviews are non-negotiable.”
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