Married or permanent life partner: why it matters in financial planning

When discussing financial planning, most people naturally focus on investments, retirement funding, tax efficiency and estate planning.

Yet one of the most important factors influencing a person's long-term financial position is often overlooked: the legal nature of their relationship. Whether a client is married, in a civil union, in a customary marriage or living with a long-term partner can significantly influence the outcome of estate planning, retirement benefits, taxes and the transfer of wealth.

Family and relationship structures are increasingly diverse. As society evolves, so too does the law. Understanding how different relationships are recognised in South Africa has therefore become an important aspect of holistic financial planning.
 

The common law spouse myth

One of the most common misconceptions in South Africa is the belief that a couple automatically acquires the rights of a married couple simply by living together for a certain number of years.

The term “common law spouse” is frequently used in conversation around the braai and is widely accepted as fact. However, South African law does not recognise such a status.

Simply living together, regardless of the duration of the relationship, does not automatically create legal rights and obligations equivalent to those of marriage.

Relationship structures recognised in South Africa

South African law currently recognises several forms of relationships. These include civil marriages under the Marriage Act, civil unions under the Civil Union Act, customary marriages in terms of the Recognition of Customary Marriages Act and certain religious marriages. Although the legal consequences are often similar, the legislative framework governing these relationships can differ in important respects.

For example, a civil union may be entered into by two adults, whether of the same or opposite sex, and carries essentially the same legal consequences as a marriage. It can also be dissolved through divorce proceedings.

There are currently discussions around creating a unified marriage framework to simplify and standardise the legislative framework.

The growing recognition of permanent life partners

Although South African law does not recognise an overarching concept of a common law spouse, individual pieces of legislation have increasingly evolved to recognise what are referred to as “permanent life partners”. This development reflects a broader understanding that many couples choose long-term committed relationships without entering into a formal marriage.

Recent amendments to the Maintenance of Surviving Spouses Act have extended certain protections to permanent life partners. Under these provisions, a surviving partner may be entitled to claim maintenance from the deceased partner's estate, provided specific requirements can be satisfied. Similarly, developments relating to the Intestate Succession Act have expanded inheritance rights in certain circumstances.

Tax planning is another area where relationship status matters. The Income Tax Act specifically defines the term "spouse" broadly enough to include certain permanent life partners where the commissioner is satisfied the union is intended to be permanent.

This has implications for capital gains tax rollover relief, donations tax exemptions and various estate-planning strategies. Recent changes relating to donations to non-resident spouses further illustrate how relationship status continues to influence tax outcomes.

However, these rights are not automatic. Unlike a formal marriage, where legal status is generally easy to establish, a life partner will need to prove that a qualifying permanent life partnership existed and in some instances that there was a reciprocal duty of support.

Planning for certainty

One of the clearest lessons for clients is that uncertainty can be expensive. Where possible, formalising a relationship provides clarity and reduces the scope for future disputes. For couples who choose not to marry, a properly drafted cohabitation agreement can help clarify intentions and responsibilities.

Equally important is ensuring that estate plans remain up to date. Wills, beneficiary nominations, powers of attorney and other planning documents should be reviewed whenever a client's personal circumstances change. A divorce, marriage, civil union or new long-term relationship may require significant amendments to an existing financial plan.

Final thoughts

Financial planning needs to help clients achieve certainty in an uncertain world. Relationship structures influence almost every aspect of personal financial planning, from wealth creation and tax planning to retirement and succession.

As South African society continues to evolve and family structures become increasingly diverse, planners and clients alike must ensure that their legal arrangements and financial plans remain aligned.

Understanding the legal consequences of relationships is no longer a niche area of expertise. It is an essential component of comprehensive financial planning and one that can have a profound impact on financial outcomes across generations.