Family Law: Understanding the Full Community of Property Witnessed

The court, in reaching its decision, referred to the case of De Kock v Jackson and another 1999 (4) SA 346, where it was concluded that there was no logical or legal reason why both the cash component and the accrued right to the pension should not form part of the community of property existing between the parties prior to the divorce.

The court’s reasoning behind the decision was that the Respondent in this matter had a clear right to the investment returns yielded by his capital reinvestment with Sanlam, in the form of future annuity income which he draws from the agreement. The court, therefore, found that such annuity income is an asset which can be calculated for purposes of determining the accrual.

The brief background to the matter was the following: The parties married in December 1999, out of community of property and subject to the accrual system as defined in the Matrimonial Property Act 88 of 1984. In July 2008, the Respondent used a portion of his pension benefit, which arose from his employment, to purchase a Personal Living Portfolio Living Annuity from Glacier Financial Solutions. In March 2017, he used the remainder of the proceeds of his pension benefit to make another purchase with Glacier.

In all future divorce proceedings, in the absence of an agreement between the parties, an expert will have to be appointed to determine the value of a party’s right to receive future payments in respect of the living annuities. The SCA has not provided a guideline as to how the calculation should be done and this could lead to further litigation, as currently, an annuitant may elect to drawdown at any rate between 2.5 or 17.5 per cent per annum.

Should there not be a history of contested percentages drawdown over a period of time, I am of the opinion that an average percentage of plus-minus 8 per cent will be used to determine the value of future payments.

For more guidance and assistance, you can contact our Family Law Department.

CJ Grey at cjgrey@dkvg.co.za

Rienie Visser at rvisser@dkvg.co.za

Lize Hirst at lhirst@dkvg.co.za

Reference List:

  • CM v EM (1086/2018) [2020] ZASCA 48.

This article is for general information purposes and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us At DKVG Attorneys for specific and detailed advice.