If you had to lose your husband to divorce, death or disability would you be able to stand on your own two feet financially? If you have not planned for this by considering the financial impact of losing your life partner, you are taking a huge risk, says Peter Dempsey, deputy CEO of the Association for Savings and Investment South Africa (ASISA).
According to Dempsey, the worst mistake any woman can make is to assume that she is financially taken care of by her husband no matter what happens. “The reality is that men tend to die at an earlier age than women, that marriages end and that spouses sometimes hide assets. While this is certainly not always the case, there are many examples of women left destitute by their spouses.”
Dempsey says while Woman’s Day may be about commemorating the historic march in 1956 by thousands of women unified in their protest against pass laws, women should also use this as a reminder that they have a long road ahead of them when it comes to fighting financial inequality. “South African women may be politically free, but a large percentage of women remain totally dependent on their husbands for their financial well being.”
He says every woman should protect herself financially by taking the following action:
Take out your own life, disability and income protection cover while you are healthy and insurable. Dempsey says usually the husband as the main breadwinner has the risk protection cover, while the wife has no policies in her name.
“Should you lose your husband you could suddenly find yourself without risk protection cover and depending on your age and health, this cover may be expensive or even impossible to buy. This is an even bigger problem if you are still caring for school going children.”
According to Dempsey, the younger and healthier you are when you buy life cover, the greater your chances of getting cover at a low premium.
Consider whether any of the family assets are in your name or whether they all belong to your husband. Dempsey says as a woman you are on an equal financial footing with your spouse only if you also own assets.
“If none of the assets are in your name, you should ask your husband why. It may be worth pointing out to your husband that splitting assets between two estates may reduce estate duty payable when one spouse dies.”
Do you know whether you are married in community of property or out of community of property? And do you understand the implications?
Dempsey says should your marriage end in divorce your financial well-being is largely determined by whether there is a contract in place or not. If you are married in community of property you share 50% of all family assets, but also the debts. If you signed an ante nuptial contract stating you are not entitled to your husband’s assets, you will walk away with nothing. If you, however, signed an ante nuptial contract with accrual, you may be entitled to a share of your husband’s assets.
“If you have been married for a long time you should go back to your ante nuptial contract and consider the implications on your financial well being in case of divorce or if your husband dies.”
Read his will
Dempsey advises all women to read their husbands’ wills. You are entitled to know what happens to his assets when he dies, as this will enable you to plan ahead, says Dempsey.
He adds that women should also have their own wills in place since the legal implications of dying without a will are huge.
Be empowered and participate
If you sit back and expect your husband to take all financial decisions because it is easier that way, you are disempowering yourself.
As a woman you are an equal partner in the marriage with equal rights and responsibilities. One of these, says Dempsey, is to actively participate in financial decisions.
“Both spouses should sit with their financial adviser when investment decision are taken and both spouses should have their own investment portfolios.”
Also use this opportunity to ask your financial adviser to confirm that you are listed as the beneficiary of your husband’s policies. If you are not the beneficiary of your husband’s life policy and he dies the proceeds will either form part of the estate or pay out to a party listed as a beneficiary.
Since his bank accounts will be frozen on death, this means that you and your family will have to wait some time before you receive money, and only after all debts have been repaid by the estate. If you are nominated as a beneficiary the life insurance company is likely to pay out within days.
Your husband’s retirement planning may take your financial needs into consideration, but has he factored in that you may outlive him by several years?
Women tend to outlive men by five to 10 years, which means that a woman will need a much bigger nest egg than her male life partner if both want to retire together and maintain the same financial lifestyle in their golden years.
This means that as a woman you will need more retirement capital than your husband to secure the same level of retirement income for the rest of your life.
Dempsey points out that if you get divorced your divorce settlement agreement must stipulate what portion of your ex-spouse’s pension fund benefit must be paid over to you. If this is not stated in the agreement and made an order of court the fund will not pay out.