A legal loophole often used by husbands to reduce the amount their wives receive in a divorce settlement has been closed by the SCA.

A TimesLIVE report says the ruling in CM v EM means living annuities can no longer be used to reduce the value of an estate under the accrual system.

In her judgment, SCA President Judge Mandisa Maya overturned a Gauteng High Court (Johannesburg) ruling in favour of a husband who had argued that three living annuities were not part of his estate.

Maya said the husband had ‘a clear right to the investment returns yielded by his capital re-investment with Sanlam, in the form of future annuity income which he draws from the agreement’.

She added: ‘Such annuity income is evidently an asset which can be valued. The trial court actually took that evidence into account, correctly so in my view. But then it erroneously considered the annuity income relevant only for purposes of a maintenance claim. It should have found it to be an asset in the (husband's) estate, which is subject to accrual.’

Maya sent the case back to the High Court, ordering it to consider evidence on the value of future payments the husband would receive from his living annuities.

Full TimesLIVE report