Effect of sequestration on property of spouse of insolvent

If a person is sequestrated the assets of the solvent spouse automatically vest in the trustee of the insolvent spouse unless the solvent spouse demonstrates that such assets are his or hers, e.g. because they were his or hers before the parties got married or were acquired in terms of a marriage settlement.

The word “spouse” means not only a wife or husband in the legal sense, but also a wife or husband by virtue of a marriage according to any law or custom, and also a woman living with a man as his wife or a man living with a woman as her husband, although not married to one another.
I have no doubt that the definition of ‘spouse’ (in terms of recent enactments and case law) would also include parties in a same-sex relationship.
This is another very sound reason to place all your assets in a company or CC owned by a family trust.
I have dealt with the advantages of a trust here, but, in summary:
  • A trust is an separate legal entity and is the product of a contractual arrangement called a Trust Deed, created by a donor in favour of beneficiaries to be managed by nominated trustees;
  • A trust never dies or comes to an end unless it is terminated by agreement or is sequestrated if it is unable to pay its debts;
  • If you are in business, are married in community of property, have signed surety in favour of a landlord, bank or supplier, you and your spouse are vulnerable if you or your business go belly up. You and your spouse can lose everything. This will never happen if the family assets are owned by a family trust.

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