Divorce is rarely just a legal process. It’s deeply emotional, often overwhelming, and comes with a host of financial decisions that can shape your life for years to come. From our experience as financial planners, we’ve seen too many people walk into divorce proceedings without fully understanding the long-term implications of the financial agreements they’re making. By the time the decree is granted, it’s often too late to renegotiate or revisit critical decisions that could have a profound impact on their financial future.
The truth is that most people delay financial planning until after their divorce is finalised, usually because they’re focused on the immediate emotional and legal issues. But seeking professional financial advice before the divorce agreement is signed can be one of the most empowering decisions you make during this time. When you understand your financial position clearly, you’re better equipped to negotiate from a place of confidence rather than fear.
One of the most common mistakes we see is when spouses assume that the division of assets is simply about fairness on paper. A house valued at R3 million and a retirement fund with the same value may seem equivalent, but they’re vastly different in financial utility. A property may come with ongoing maintenance costs, fluctuating market value, and limited liquidity. A retirement fund, on the other hand, offers tax efficiency, long-term growth, and structured income in the future. Without professional guidance, it’s easy to make short-term decisions that leave you financially exposed later in life.
Tax is another area where divorce settlements can become unnecessarily expensive. Lump-sum payouts, child maintenance, and the division of investment assets each come with their own tax implications. For example, we’ve seen cases where a lump-sum settlement triggered a significant capital gains event, which could have been avoided or mitigated with the right structure. Maintenance payments, particularly spousal support, are also taxed differently for the payer and recipient. The tax landscape in South Africa is constantly evolving and navigating it without the support of a planner or tax professional can lead to unanticipated liabilities.
Retirement savings are often the single largest asset in a marriage, and they’re frequently misunderstood in the divorce process. Whether it’s a pension fund, provident fund, or retirement annuity, these vehicles are governed by specific rules around access, valuation, and division. A defined benefit fund, for instance, is valued differently from a defined contribution fund, and understanding these nuances is critical to ensuring a fair settlement. We’ve worked with clients who only discovered after the fact that they were entitled to a larger portion of the pension interest but had already signed the divorce order.
Debt is another area that’s often overlooked. In many divorces, liabilities are divided without a clear understanding of who is legally responsible for the debt, or how it will impact each spouse’s post-divorce financial stability. We’ve seen cases where one spouse unknowingly took on joint debt that ballooned over time, simply because the divorce order wasn’t specific enough. A financial advisor can help you fully assess the household liabilities and ensure that the division of debt is fair and manageable for both parties.
Liquidity is something that rarely comes up in initial divorce conversations, yet it becomes one of the most urgent issues after the split. Going from a dual-income household to a single income often means that cash flow becomes constrained, especially in the first year after divorce. Clients are often surprised at how quickly expenses rise once they are living independently. From household utilities and rent to insurance and school fees, the cost of living post-divorce can escalate rapidly. Pre-divorce planning helps map out these expenses and create a buffer so you’re not caught financially short once the divorce is finalised.
Then there are the long-term costs that need to be considered—things such as education, medical aid, gap cover, and insurance. While these expenses are generally included in most divorce orders, it’s vital that they are detailed with clarity to avoid any ambiguity. We always encourage clients to be specific about who will pay for what, how these costs will increase over time, and how unexpected expenses—such as specialist care or school trips—will be handled. Ensuring precision at this stage avoids future misunderstandings.
A major blind spot in divorce planning is the estate plan. A divorce should trigger a full review of your will, trust structures, life insurance policies, and beneficiary nominations. Many people assume that a divorce automatically revokes previous wills or beneficiary nominations, which is not the case. Unless updated, your ex-spouse could remain a beneficiary on your life cover or receive benefits from a trust. We’ve worked with clients who only realised years later that they had failed to update these critical documents, putting their new families and financial plans at risk.
Engaging with a financial planner early in the divorce process isn’t just about protecting assets—it’s also about preserving emotional energy. When you understand your numbers, you reduce anxiety. You can enter negotiations with a calm, informed mindset rather than reacting out of panic or fear. We’ve seen this shift in many of our clients. They start out feeling overwhelmed and disempowered, and by the time they’ve worked through a financial plan, they feel more grounded and in control of their future.
Another benefit of early financial planning is that it can streamline the legal process. When you arrive at your attorney’s office with a clear picture of your finances—assets, liabilities, income needs, and future goals—it reduces the time spent on information-gathering and negotiation. This can translate into lower legal fees and fewer delays, especially when both parties are willing to mediate rather than litigate.
A well-structured financial plan before the divorce is finalised can serve as a powerful roadmap, helping you rebuild your financial life with purpose, clarity, and confidence. If you’re facing the prospect of divorce, don’t wait until the paperwork is signed to seek advice. Financial planning should not be an afterthought – it should be part of your strategy from day one.
Have a great day.
Sue
