To calculate a divorce settlement amount in South Africa, the parties list all the assets and liabilities of the marriage, value each one, and decide how to divide them. The division is not 50/50 by default; the court looks at the parties’ direct and indirect contributions, the children’s best interests, and the parties’ existing or future earning capacity. The settlement agreement records the agreed division, and the court can make the agreement an order.
This page explains how to calculate a divorce settlement amount, the asset categories that are typically included, and the practical steps to put the settlement together. If you need help with a divorce settlement, our Sandton-based Family Law team can assist.
What the settlement covers
The divorce settlement covers the division of the assets, the allocation of the liabilities, the spousal maintenance, and the children’s maintenance. The settlement is a single document that records the parties’ agreement on all of these issues, and the agreement can be made an order of court.
The settlement is not the same as the parenting plan, which is a separate document covering the children’s care and contact. The two are usually drafted at the same time, but they are separate documents, and the parenting plan is not part of the settlement agreement.
Asset categories
The settlement covers all the assets of the marriage, regardless of whose name they are in. The most common asset categories are listed below in the order they usually appear in the settlement.
- The matrimonial home, including the bond and the value of the property.
- Other immovable property, including holiday homes and investment properties.
- Movable property, including furniture, vehicles, and household contents.
- Bank accounts, including savings, cheque, and investment accounts.
- Pension and retirement funds, including the pension interest and the retirement annuity.
- Business interests, including shares, partnerships, and sole proprietorships.
- Other assets, including insurance policies, intellectual property, and crypto assets.
Liability categories
The settlement also covers the allocation of the liabilities of the marriage. The most common liability categories are listed below in the order they usually appear in the settlement.
- The bond on the matrimonial home and any other property.
- Vehicle finance and other personal loans.
- Credit card balances and overdrafts.
- Tax liabilities, including any capital gains tax or income tax.
- Other liabilities, including study loans and family loans.
How the court divides the assets
The court divides the assets based on the parties’ direct and indirect contributions, the children’s best interests, and the parties’ existing or future earning capacity. The court is not bound by a 50/50 split, although 50/50 is the starting point in many marriages, especially where the marriage is long and the parties have made equal contributions.
The court will weigh the actual facts of the matter, including the parties’ ages, the duration of the marriage, the parties’ health, the parties’ earning capacity, and the children’s needs. The division is calibrated to the facts of the matter, and the parties can agree to a different split if they have grounds for it.
Spousal maintenance
The settlement can include spousal maintenance, which is the monthly amount one party pays to the other to support them after the divorce. The amount is calibrated to the parties’ income, the parties’ needs, and the parties’ other obligations. The court will weigh the actual facts of the matter and arrive at a fair amount.
Spousal maintenance is different from child maintenance. Spousal maintenance is paid to the spouse, and ends when the spouse remarries or cohabits. Child maintenance is paid for the benefit of the child, and continues until the child is self-supporting.
Common Mistakes to Avoid
These are the patterns that leave parties with the wrong outcome.
- Skipping the inventory. The settlement must list all the assets and liabilities, and the parties cannot vary the agreement without a complete inventory.
- Forgetting the pension interest. The pension interest is usually the largest asset, and the parties must value it correctly.
- Failing to value the business. A business is a complex asset, and the parties must value it correctly to avoid disputes.
- Skipping the tax implications. The transfer of an asset can trigger capital gains tax, and the parties should seek tax advice.
- Letting the dispute escalate. The right path is to engage with the other party and apply for variation where appropriate.
Frequently Asked Questions
How is a divorce settlement amount calculated in South Africa?
The parties list all the assets and liabilities of the marriage, value each one, and decide how to divide them. The division is not 50/50 by default; the court looks at the parties’ direct and indirect contributions, the children’s best interests, and the parties’ existing or future earning capacity.
What is the average divorce settlement in South Africa?
There is no average divorce settlement, since the amount depends on the parties’ assets, liabilities, and circumstances. The settlement can be a few thousand rand in a short marriage with few assets, or several million rand in a long marriage with substantial assets. Divorce costs in South Africa can vary significantly depending on the complexity of the case. It is essential for individuals to seek professional advice to understand their financial obligations and rights. Additionally, those considering divorce should prepare for potential legal fees, which can also contribute to the overall cost.
What assets are excluded from a divorce settlement in South Africa?
Assets that are excluded from a divorce settlement include assets owned before the marriage, assets inherited during the marriage, and assets that are subject to a prenuptial agreement. The court will weigh the actual facts of the matter against the parties’ competing obligations.
What liabilities are included in a divorce settlement in South Africa?
The liabilities included in a divorce settlement are the bond on the matrimonial home, vehicle finance, personal loans, credit card balances, and tax liabilities. The parties must value the liabilities correctly and allocate them in the settlement agreement.
Is a divorce settlement taxable in South Africa?
The transfer of the matrimonial home is generally not subject to capital gains tax, since the exclusion in the Income Tax Act applies. The transfer of other assets may trigger capital gains tax, and the parties should seek tax advice before the transfer.
Can a divorce settlement be varied?
Yes. The settlement can be varied on a material change in circumstances, including a change in income, a change in the children’s needs, or a change in the parties’ other obligations. The court will weigh the actual facts of the matter against the parties’ competing obligations.
How long does a divorce settlement take in South Africa?
An uncontested divorce settlement usually takes two to six weeks from the date the agreement is signed. A contested divorce can take six months to more than a year, depending on the complexity of the assets and the willingness of the parties to negotiate.
Get help with your divorce settlement. If you need help with a divorce settlement, Otrebski Attorneys’ Family Law team in Sandton can assist. As a 100% women-led firm with a 5-star Google rating, we focus on compassionate, practical legal solutions for families.
Disclaimer. This article provides general information about how to calculate a divorce settlement amount in South Africa. It is not legal advice and does not replace consultation with a qualified family attorney. The relevant law is set out in the Divorce Act 70 of 1979 and the Income Tax Act 58 of 1962, both of which may be amended. Confirm the current position with the South African Revenue Service or speak to a family attorney before relying on anything in this article. Divorce settlement tax implications in South Africa can significantly affect the overall financial outcome of a divorce. Understanding how these tax implications work is essential for both parties involved in the settlement. It is advisable to seek professional guidance to navigate these complexities and ensure an equitable resolution.