At our Retirement and Risk benefit education workshops, we emphasise the importance of having an up-to-date Will. A concern frequently raised by attendees is the rights of couples living together or of their common law spouse, often referred to as a cohabitant. Chartered Employee Benefits Director, Andrew Craze, provides clarity in this article.
Most members believe cohabitation is a legal relationship, similar to marriage, customary marriage or civil unions. In fact, there is no legal status. This month we look at some of the aspects cohabiting partners should consider.
Cohabitation is not a recognised legal relationship in South African law
Co-habiting or common-law partners are not without rights; however, it is difficult to enforce these rights as there is little case law dealing with cohabitation relationships.
Some areas of law are applicable to co-habiting partners. On Medical schemes, a cohabiting partner can be recognised as a financial dependant; partners can nominate each other as beneficiaries on life policies; a partner can be recognised as a nominee under the retirement fund rules; a partner is covered by the Domestic Violence Act, and by the Maintenance Act to provide for children.
We have found that these are the most misunderstood areas of financial risk facing couples:
- The death of a partner: When a partner dies without a will (intestate), the surviving partner has no right of inheritance in terms of the Intestate Succession Act. They also cannot claim in terms of the provisions of the Maintenance of Surviving Spouse Act as they have no enforceable right to claim spousal maintenance.
- The dissolution of the relationship: Neither party has much recourse in terms of the divisions of assets.
Proposed Domestic Partnership Bill
Since more couples are choosing to live together without entering into a legally recognised marital regime, legal changes have been considered resulting in the draft Domestic Partnership Bill, tabled in 2008, though not yet law.
The Bill proposes that couples register their relationship as a domestic partnership and, in so doing, have the same rights and responsibilities as marriage partners.
The Cohabitation Agreement is a binding contract between two parties cohabiting or intending to cohabit. The various aspects of their relationship are formalised in an agreement, giving substantial protection to both parties.
The Agreement must be entered any time before the relationship has come to an end. It is preferable to sign the agreement before the cohabitation relationship starts to ensure absolute certainty at the commencement of the relationship.
The Agreement should deal with, among other things:
- The assets and liabilities of the respective parties, including joint purchase of immovable property.
- The managing of living expenses of the common household and the apportionment thereof.
- Agreement that they will nominate each other as beneficiaries on their various insurance policies and retirement funds.
- How the dissolution of the relationship will take place, should it end.
Draft a Will
Another important way to protect yourself and your cohabitation partner is to ensure that your Will is current.
Bear in mind that cohabiting parties do not have a right to any assets in their respective partner’s deceased estates if the said partner passes away without leaving a Will.
On the other hand, a person may make any bequest in a Will, and in this way the cohabiting parties may ensure that their partner is looked after in the event of their passing away.
It is important that both parties in this type of relationship do the necessary work and prepare the necessary documents to protect both their rights during the cohabitation relationship.