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SCA reverses ruling excluding living annuity from a spouse's estate

The investment vehicle was deemed an excluded asset in a 2019 South Gauteng High Court ruling.

Picture: SAPS

CAPE TOWN - In an important ruling affecting divorce settlements, the Supreme Court has reversed a High Court ruling that excludes a living annuity from a spouse's estate.

The investment vehicle was deemed an excluded asset in a 2019 South Gauteng High Court ruling.

In this particular case, the husband used his pension pay-out to purchase a living annuity to avoid sharing 50% of the capital with his spouse.

The husband argued that the capital belonged to the insurance company where the annuity was registered and therefore did not form part of his estate.

The High Court ruled in his favour and an appeals court ruling upheld the judgment.

Now the Supreme Court has ruled that the annuity is part of the spouse's estate.

Specialist divorce and criminal lawyer Professor Billy Gundelfinger said it was a groundbreaking decision.

"Because it reversed the previous law on living annuities whereas previously, husbands could hide their liquid sum by purchasing a living annuity and then alleging based on the law up to then, that it didn’t form part of the accrual and therefore the wife couldn’t make a claim."