M v M (14/26868) [2016] ZAGPJHC 387 (10 August 2016)

M v M (14/26868) [2016] ZAGPJHC 387 (10 August 2016)

The court found that the living annuity acquired by the plaintiff from his pension fund during the marriage is strictly regulated by statute and does not vest the capital in the annuitant. The capital is owned by the insurer and is not accessible, assignable, or available for commutation by the plaintiff. The statutory framework, including General Notice 18 and the Income Tax Act, establishes that the annuitant only has a right to the income stream, not the underlying capital. The ability to nominate beneficiaries or adjust drawdown rates does not alter the fundamental nature of the annuity as an income-producing asset, not a capital asset. Including the living annuity in the accrual...

Citation
[2016] ZAGPJHC 387
Parties
Plaintiff: M E; Defendant: M C
Court
South Gauteng High Court, Johannesburg
Jurisdiction
South Africa
Judgment Date
10 August 2016
Case Number
14/26868
Procedural Posture
Divorce Action / Separation of Accrual Issue for Determination Prior to Final Divorce
Outcome
The living annuity does not form part of the plaintiff's estate for accrual calculation.
Judges
Victor
Legal Topics
Accrual System, Living Annuity, Matrimonial Property Act, Income Tax Act, Estate Calculation
Family and Children Tax Law Accrual System Living Annuity Matrimonial Property Act Income Tax Act Estate Calculation

Case Brief

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Parties

M E

Plaintiff

M C

Defendant

Procedural Posture

Divorce Action / Separation of Accrual Issue for Determination Prior to Final Divorce

Legal Issues

  1. 1 Whether a living annuity acquired by a spouse during marriage forms part of the estate for accrual calculation on divorce.
  2. 2 Whether the non-annuitant spouse has a right to a portion of the annuitant's periodical income derived from the living annuity.

Ratio Decidendi

The court found that the living annuity acquired by the plaintiff from his pension fund during the marriage is strictly regulated by statute and does not vest the capital in the annuitant. The capital is owned by the insurer and is not accessible, assignable, or available for commutation by the plaintiff. The statutory framework, including General Notice 18 and the Income Tax Act, establishes that the annuitant only has a right to the income stream, not the underlying capital. The ability to nominate beneficiaries or adjust drawdown rates does not alter the fundamental nature of the annuity as an income-producing asset, not a capital asset. Including the living annuity in the accrual...

Court Disposition

The living annuity does not form part of the plaintiff's estate for accrual calculation.

Orders

  • The living annuity does not form part of the plaintiff’s estate.
  • The costs are costs in the cause of the divorce action.