Montanari v Montanari

The parties married in December 1999 out of community of property subject to the accrual system in terms of the Matrimonial Property Act 88 of 1984. During the marriage, the respondent used the proceeds of his pension benefits to purchase three Personal Portfolio Living Annuities from Glacier Financial Solutions (Sanlam). When divorce proceedings were instituted, the respondent sought a declaratory order that the living annuities were not assets in his estate and therefore excluded from the accrual calculation. The applicant counterclaimed for an accrual award and contended that the respondent’s rights under the living annuities should be included as assets in his estate. The trial court and Full Court held, relying on ST v CT, that the living annuities did not form part of the respondent’s estate for accrual purposes. The applicant appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the Full Court was replaced with an order declaring that the value of the respondent’s right to future annuity payments under the identified living annuities is an asset in his estate for purposes of calculating accrual, and the matter was remitted to the trial court for the admission of evidence on the value of those rights.

This judgment authoritatively clarifies South African law on the treatment of living annuities in divorce proceedings subject to the accrual system. It establishes that, while the underlying capital of a living annuity is not owned by the annuitant, the annuitant’s right to future annuity payments is a patrimonial asset capable of valuation and inclusion in the accrual calculation. The case limits an overbroad reading of ST v CT and prevents the potential abuse of living annuities to shield substantial wealth from accrual claims.