South Africa recently made global headlines after its government put forward a Green Paper on Marriages to allow women to have more than one husband – a practice also known as polyandry.
Polygamy is currently legal in South Africa, under certain conditions, but only applies to men.
A husband can lawfully marry another woman under the country’s Recognition of Customary Marriages Act (RCMA), but permission needs to be given by a competent court.
Former South African president Jacob Zuma, for instance, currently has four legally-recognised wives.
Financial advice can be fairly complicated when dealing with one spouse and one family, but what needs to be done when there are more to take into account?
International Adviser spoke with Tracy Muller, head of fiduciary advice at Nedbank to understand how estate planning needs to adapt to cater to polygamous clients, their wives, and respective families.
Human rights issue
Muller said that estate planning should always start with five objectives:
- Structuring wealth optimally;
- Planning for significant life events;
- Factoring in the financial impact of death,
- Making provisions for the cost of dying; and,
- Having a valid and up-to-date Will.
Marital status is incredibly significant in this process as it determines the “proprietary rights of each spouse in respect of assets held and responsibilities for any liabilities incurred”, Muller said.
But before the RCMA came into force in November 2000, women were not entitled to such rights.
Muller said: “Polygamous customary marriages entered into before 15 November 2000 were still governed by often archaic, discriminatory and patriarchal customary laws. Under these laws, women had no rights of ownership since property ownership and control became the sole purview of the husband, including for purposes of divorce and death.
“The court in Ramuhovhi and Others v President of the Republic of South Africa and Others 2018, therefore, found the provision to be constitutionally invalid based on it limiting the right to human dignity of, and unfairly discriminating against, women in these customary marriages on the basis of gender, race and ethnic or social origin.
“The court directed that the provision be amended within a 24-month period and ordered that, in the interim, wives in polygamous customary marriages entered into before 15 November 2000 should enjoy equal ownership rights in matrimonial property between each of them and their husband.”
Amendments
An updated version of the RCMA came into effect on 1 June 2021, and Muller says that its marks a “significant step towards equality for women in South Africa”.
It sets out that in any polygamous marriage, regardless of whether it was entered into before 15 November 2000, spouses have joint and equal ownership and rights to, as well as management and control over, marital property.
This includes houses, family, and personal property.
Muller added: “It is also worth noting that the Green Paper on Marriages in South Africa was published for public comment by 30 June 2021. The green paper aims to work towards the development of a new Single Marriage Bill and will align the country’s marriage regime with the constitutional principle of equality, as well as modern social dynamics.
“Specifically, the green paper proposes to fill the gaps in the current legislation relating to religious marriages such as the Hindu, Muslim and other customary marriages that are practised in some African or royal families.
“It will also deal with polyandrous marriages – a marriage of a woman to two or more men at the same time – as well as the solemnisation and registration of customary marriages that involve non-citizens especially cross-border communities or citizens of neighbouring countries.”
Access or lack there of
When a husband applies to the court to enter into an additional marriage, and if successful, the court is required to end his existing matrimonial property system to make sure that all spouses are entitled to a fair distribution of assets and property.
But this comes with problems, Muller said.
“In practice, most parties who enter into customary marriages are indigent people who are based in areas where there are issues of inaccessibility to courts, [As a result], the subsequent marriage would not be void but regarded as a marriage out of community of property.
“This could give rise to inequality where, for example, only the first wife is married in a more beneficial property regime, while the rest of the wives are out of community of property. It is, therefore, important for the husband and the further wives to understand these consequences.”
If this is the case, Muller explained, the husband is usually advised to place the subsequent wives in the position they would have been had their marriages complied with the RCMA requirements.
Muller said that this could be done, for example, by:
- Taking out appropriate life insurance cover payable to the subsequent wives, which should qualify for the spousal deduction for estate duty purposes; and/or,
- Making donations of his share of the joint estate to the subsequent wives during his lifetime, which should not be subject to any donations tax or capital gains tax. It should be kept in mind, however, that the consent of the first wife, if married in community of property, may be required in this instance.
Case study
But one of the most important tools in estate planning is having a valid and up-to-date Will.
“A Will can assist a testator/testatrix in controlling how assets are to be distributed after death and recording wishes in respect of the well-being of family and dependants when they are no longer there.
“If a person dies without a valid Will, they automatically forfeit this freedom of deciding what should happen to the estate. For example, where the husband has provided a house for each wife, as well as a family home; each wife will enjoy, jointly with the husband, equal rights of ownership in respect of her own particular house and the property therein.
“In respect of the family home, the ownership rights vest in all the wives and their husband jointly. On the death of the husband, the total value of his share in all the households and the common property will be included in his estate.
“The wives should each be able to claim for maintenance. In addition, in terms of intestate succession rules and assuming that the husband is survived by his wives and descendants, the wives will each inherit either an amount of ZAR250,000 (£12,500, $17,071, €14,500) or a child’s share – the equal portion the descendant of the deceased would have inherited – whichever amount is greater.
“The remainder will then be inherited by the descendants per stirpes and with representation.
“This may result in the household with the least number of descendants receiving the least share of the estate, whereas the household with the most descendants receiving the lion’s share of the estate.”
In this case, if all parties agree, they can enter into a redistribution agreement. But if that is not possible, it could result in forced sale of assets to settle the claims.
Trusts
Muller added that, even though life assurance may be used in this scenario to ensure that the respective families receive a fair share of the estate after death, the importance of a Will is evident.
“It would, therefore, be recommended for the husband to draw up a valid Will in terms of which he bequeaths his shares in the respective households in such a way that property belonging to a particular household remains in that family.
“This may be done either by nominating the specific wife of each household as the heir thereof or providing for a testamentary trust to be established after death to take over ownership of the husband’s shares in the event of his death.
“An alternative could be for the husband to establish a trust for purposes of holding his shares, during his lifetime. In that instance, at his death, the shares would not form part of his estate. The advantages of utilising a trust as an ownership option should then be weighed up against the cost thereof – both in terms of the initial transfer of assets as well as ongoing expenses.”
Tax
But making sure that everybody gets their share is not the only worry people should have when it comes to estate planning.
When the husband dies, all the wives need to understand whether they would qualify for tax relief on capital gains tax (CGT) and estate duty.
For CGT, the primary residence would receive a ZAR2m exemption; but the husband would have needed to choose which property is regarded as his primary residence.
When it comes to estate duty, Muller said that the deduction “should be allowed to the extent that assets devolve on any of the wives”.
“In addition, a primary abatement of ZAR3.5m should be allowed. In this regard, a roll-over of any unused estate duty abatement to the surviving spouse should apply. However, such amount should be apportioned between the total number of the spouses to determine the roll-over amount to be used for the deceased.
“In other words, a deceased spouse will be entitled to her primary abatement of ZAR3.5m, plus any remaining primary abatement of her predeceased spouse, divided by the number of her predeceased spouse’s surviving spouses.
“Spouses in a polygamous customary marriage should ensure that their estate is structured optimally for both during and after their lifetime. The mechanism to achieve this is a properly structured and well considered estate plan.
“This will ensure that the intended people benefit from their wealth in the correct proportions in order to avoid disputes amongst the households, as well as prevent assets (such as immovable property) having to be sold to cover estate expenses,” Muller added.
