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Divorce doesn't just divide people, it can divide empires. For South African's high nett worth individuals, business owners, and entrepreneurs, the end of a marriage can trigger a complex legal and financial unravelling that threatens the very structure of a company.
The good news?
With careful planning, your wealth and business can remain intact, even when your personal life takes a turn.
Your Marriage Contract is your First Line of Defence
The starting point for any entrepreneur is the marriage contract. Whether you marry in or out
of community of property determines how your assets, including your
business interests, are treated on divorce.
An antenuptial contract (ANC) with exclusion of
the accrual system is often the safest route for those with
established companies or family businesses. It ensures each spouse
retains control over their own assets. However, if you're
already married without such a contract, it's still possible to
apply to court for a postnuptial amendment -provided both parties
agree.
Shielding your shares and business interests
One of the biggest mistakes a high-earning spouse can make is blurring the line between personal and business assets. Using company accounts to fund private expenses, or holding personal property through corporate structures, can complicate matters when it's time to value and divide the estate and/or calculate the accrual. Clear separation between private and corporate finances, along with meticulous record-keeping, can go a long way in protecting both.
There are legitimate ways to protect company shares without crossing legal lines. Shares may be held in a trust or a holding company, but only if such entities are established for legitimate commercial reasons and not as a last-minute divorce shield. Similarly, a carefully drafted shareholder agreement can include provisions to restrict transfers of shares to non-partners and ex-spouses, preserving control within the company.
The best asset protection happens long before a marriage begins to falter. High nett worth individuals should consider pre-emptive legal and financial structures, from buy-and-sell agreements to trusts and discretionary investment vehicles. Confidentiality agreements and business continuity plans are equally critical, as divorce proceedings can expose sensitive information about company operations and valuations. With the right legal guidance, it's possible to protect both reputation and long-term business value.
A strategic divorce plan
Divorce may be personal, but for entrepreneurs and investors, it's also professional. Proactive legal guidance is vital, protecting your business requires more than emotional resilience – it demands foresight, structure and the right legal strategy. Strategic settlements, mediated solutions, or ring-fenced asset arrangements can all help preserve long-term value.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
