Unraveling Trust Assets in Divorce: Navigating South African Matrimonial Law.

What is the primary legal issue concerning trust assets in South African divorce law?

  • The primary issue is whether trust assets can be considered part of a spouse’s estate for calculating the accrual in divorces where parties are married out of community of property with the accrual system, or for dividing the joint estate in community of property marriages.

How do antenuptial contracts affect the treatment of trust assets in divorce?

  • Antenuptial contracts can expressly exclude certain assets from forming part of the accrual. If trust assets are specified in these exclusions, they are not included in the accrual calculation during divorce proceedings.

What is the significance of the Trust Property Control Act in relation to divorce proceedings?

  • The Trust Property Control Act stipulates that trust property should be separate from the founder/trustee’s personal estate, impacting how these assets are treated in divorce, particularly in determining the accrual or division of estates.

How did the Supreme Court of Appeal address the issue of trust assets in divorce inP A F v S C F ?

  • In P A F v S C F, the Supreme Court of Appeal provided clarity on considering trust assets when determining the value of spouses’ estates for accrual claims, focusing on whether trust assets should be included in the matrimonial property division.

What strategies do financially stronger spouses use concerning trusts in anticipation of divorce?

  • Financially stronger spouses often create or manipulate trusts to protect their assets from being included in matrimonial claims, potentially prejudicing the financially weaker spouse by excluding these assets from the accrual calculation.

What is the concept of an ‘alter ego trust’ in matrimonial disputes?

  • An ‘alter ego trust’ refers to a trust that is so closely controlled by an individual that it is essentially an extension of their personal estate, leading courts to sometimes pierce the trust veil and include its assets in the matrimonial property division.

What burden of proof lies on the spouse claiming inclusion of trust assets in accrual?

  • The spouse claiming the inclusion of trust assets in the accrual must prove that these assets were effectively controlled and beneficially owned by the other spouse and should be considered part of the matrimonial estate.

How do courts approach the division of trust assets in divorce?

  • Courts assess whether trusts were established or used to conceal assets or to defeat fair division. If so, they may treat trust assets as part of the personal estate of the spouse, especially if the trust is found to be the spouse’s alter ego.

What legal remedies are available for spouses prejudiced by trust arrangements in divorce?

  • Spouses can argue for the inclusion of trust assets in the matrimonial property by demonstrating the trust’s operation as an alter ego of the controlling spouse, or by showing that the trust was used to defeat equitable division.

What impact do recent legal precedents have on the treatment of trust assets in divorce?

  • Recent legal precedents, such as those established in Paf v Scf, have clarified the conditions under which trust assets may be considered in matrimonial property divisions, providing a framework for equitable treatment and preventing the abuse of trusts to shield assets from fair division in divorce.

Written by Bertus Preller, a Family Law and Divorce Law attorney and Mediator at Maurice Phillips Wisenberg in Cape Town. A blog, managed by SplashLaw, for more information on Family Law read more here.