Living together: Why am I financially vulnerable?

Globally, marriage rates are in decline – people are increasingly choosing not to get married. While this is not true for all countries, South Africa appears to be following this global trend. Figures from StatisticsSA show a steady reduction in the number of marriages over the past decade.

Living together, or cohabitation, is an increasingly popular option among young urban couples. Many live together for longer before tying the knot, if they do at all. Economic factors have played a role in this trend, but there is also greater acceptance of cohabitation in modern society.

The term “cohabiting” refers simply to living together. The Constitutional Court prefers the term “permanent life partnership” when referring to cohabiting couples who are in a committed relationship. In this article, “cohabitation” refers to living with a partner in a long-term relationship without being married or in a civil union. It involves sharing a home and supporting each other, usually sharing financial and household responsibilities. Importantly, there is an implicit or explicit “duty of support”, meaning the partners recognise their obligations to each other emotionally, practically in their day-to-day lives, and financially.

If you are casually living with a partner with few signs of stability or long-term commitment, the law is unlikely to recognise you as cohabitating in the deeper sense.

Unmarried cohabiting couples do not enjoy the rights and protections that are conferred on people who are legally married. Unlike certain countries, there is no such thing as common-law marriage in South Africa - the law does not recognise cohabiting couples as married if they have been living together and dependent on each other for a meaningful length of time. There are moves to address this through the Domestic Partnership Bill, but it remains in draft form.

The dangers of cohabiting are especially apparent if the relationship ends suddenly –due to a break-up or death. A woman who has raised children and contributed economically to a household has no automatic claim to the shared property, no right to maintenance and no automatic right to inherit her partner’s property if the partner dies without a will (intestate).

The law does recognise certain rights of cohabiting partners, but they are generally not automatic and need to be fought for in the courts.

If you and your partner have been living together in a long-term relationship, know what rights you have under the law, what types of claims against a partner would have a likelihood of succeeding in court and what you can do to secure similar rights to married couples.

Does the law recognise my financial dependence on my partner?

If you are financially dependent on your partner in a cohabitation relationship, when the relationship ends you cannot automatically claim spousal maintenance in the way a spouse in a marriage could. Any maintenance claim would generally depend on a proven duty of support (express or tacit) or remedies such as universal partnership or enrichment.

If the relationship ends through the death of your partner, your dependence on that partner is likely to be recognised under the Pension Funds Act. If your partner was a member of a retirement fund and if they had group risk life cover through the fund, the trustees of the retirement fund are required to consider those who were legally or financially dependent on the deceased when distributing the benefits.

What happens to our assets on break-up or the death of a partner?

Marriage provides a legal framework that governs how a couple’s assets are divided (read Under what property regime am I married?). This does not apply to a cohabiting couple –   there is no automatic joint estate, and no automatic sharing regime. In the absence of a cohabitation agreement or a will bequeathing assets to a surviving partner, a surviving partner has no claim on a deceased partner’s estate.

However, you may be able to argue in court that a “universal partnership” existed between you, which may result in certain compensation ordered by the court (see below).

Other legal avenues open to you, which are again issues you would need to fight in court, with the accompanying costs, are “property division” and “unjust enrichment”. If you contributed economically to your partner’s assets, on break-up or death you can claim your fair share of the property or show that your partner was unfairly enriched by your contributions.

What is a universal partnership and would it apply to my relationship?

A universal partnership exists where two parties have pooled their resources and efforts in building a shared store of wealth. This may be through a written or consensual verbal agreement. It was mainly applied in the past to business relationships but is increasingly being applied to personal relationships.

However, this is a complex legal remedy where, to be successful, a partner must prove there was a mutual intention by the parties to share profits, property and responsibilities. This route often requires extensive litigation, incurring substantial legal costs.

What happens if we jointly own a home?

If you and your partner bought a property and each contributed to paying the bond, but only your partner’s name is on the title deed, you are not automatically entitled to a share of the property. However, you may be able to claim a share based on your contributions using the “property division” argument.

If both names are on the title deed, you both have rights to the property. This could mean selling the property and splitting the proceeds, or one person buying out the other’s share.

Are children of unmarried parents protected?

Protections that children enjoy under the Children’s Act are not dependent on their parents’ marital status. Whether you are married or not, the Act requires parents to act in their children’s best interests when it comes to care, contact, upbringing and financial support. This would also apply to a legally appointed guardian.

In the case of unmarried parents, the biological mother automatically has full parental responsibilities and rights, whereas the father, to enjoy similar rights, must prove his involvement in the child’s upbringing and contribution to the child’s financial support.

What is a cohabitation agreement and will it protect me?

Cohabiting couples can sign a legally enforceable document known as a cohabitation agreement, which gives them similar rights (but does not automatically put them in the same legal position) as married couples. The agreement, which would be drawn up through an attorney with mutual consent, would cover how they manage their finances and property while living together and what happens if they split up or if one of them dies. This can include how to divide property and whether any maintenance will be paid when the relationship ends.

It’s important to note the following difference between a cohabitation agreement and a universal partnership: a cohabitation agreement is a written contract where partners choose, upfront, how finances and property will be handled during the relationship and when it ends. A universal partnership is a remedy you can use to claim compensation after the relationship ends, where a judge decides based on evidence produced in court.

This article was written by Martin Hesse, a freelancer personal finance writer and former editor of Independent Newspaper’s Personal Finance. It was reviewed by Wessel Oosthuizen, head of financial planning at Fiscal Private Client Services and the former director of the Centre for Financial Planning Law at the University of the Free State.