The things you should know about moving in with your partner
If you are not married to your partner, you have no claim to their assets unless...
Cohabiting couples enjoy no right of inheritance in terms of intestate succession, and this can leave them financially exposed should one of them pass away without a valid will.
Once upon a time, moving in with your “other half” meant learning to live in a shared space and dealing with mundane issues such as who washed the dishes last. But in a society where little is permanent, the reality of moving in with your loved one, like many other things, means you need to read the fine print first.
According to Charlene May of the Legal Resources Centre, about 3.5m South Africans are cohabiting in domestic partnerships.
Kristy Giva Knill, head of the family law department at McLoughlin Clark Attorneys, says she often draws up cohabitation agreements for couples who want to move in together. “However, if you don’t sign an agreement beforehand, nothing prohibits you from doing it at a later stage when you are already living together,” she says.
What is a cohabitation agreement?
Typically, this is a document drawn up by a lawyer and signed by you and your partner to agree on:
- A schedule of each of your assets when you start living together.
- Your financial contribution to the joint home.
- What will happen if your relationship ends either due to a death of one partner or a decision to end the relationship.
- How a dispute between the two of you will be dealt with, for example, mediation.
“You need a cohabitation agreement in South Africa because the law does not recognise common law marriages as valid. This means that generally if you are not married to your partner, you have no claim to their assets. In addition, we have no legislation that regulates domestic partnerships,” Knill says.
She notes that although the Domestic Partnership Bill was gazetted in 2008, it is not yet law.
A universal partnership
SA case law has evolved to recognise that a universal partnership may exist between the parties. In a universal partnership:
- Each party must bring something to the partnership i.e. money, skills, labour, etc.
- The partnership should be carried on for the joint benefit of the parties.
- The object of the partnership should be to make a profit.
- The goal of the partnership should be a legitimate one.
Rita Cool, certified financial planner from Alexander Forbes Financial Planning Consultants, says relationships are complex. "Add money to the mix and things can get even more tricky."
She advises that you should be open and honest with your partner about how you are managing your money. This is particularly important if you intend to have joint ownership of property and assets outside of marriage.
One of the benefits of cohabiting is that unless you incur a debt jointly, you cannot be held liable for your partner’s debts.
In many households, one partner handles all the bill payments. However, Cool warns that this can lead to misunderstandings, and arguments, about where the money goes every month.
“Both partners should understand how much the household spends every month, and how your bills get paid. If you’re the one who’s usually in charge of bills, take an hour to walk your partner through your process. Show him or her which bills are paid electronically, which are paid by cash, the monthly amounts and due dates.
“This won’t just help both of you understand the monthly cash flow, it will ensure that you can each handle household finances in the event of an emergency or death of the other partner.”
How to merge your finances
When discussing this, you must detail all your individual income expenses and financial commitments. Cool lists some of the important things to consider:
- How much you earn. What is the income you will bring home? What is the frequency of your income? Are you permanently employed or a contractor?
- What are your current individual expenses and financial commitments? List your assets and your debt.
- Your individual financial goals and your money management behaviour, skills and techniques.
- Disclose your financial obligations. This becomes tricky if left until too late and may cause unnecessary tension in the relationship.
- You should be able to manage your own finances before expecting another person to merge their finances with yours.
- Always keep an open line of communication - honesty is the best policy.
- Set a money limit which you can each spend without having to consult each other.
- Don’t forget to change your wills and beneficiaries on pension or provident funds as required.
The importance of a will
If you die without a valid will and testament, your estate will be dealt with as per the Intestate Succession Act.
Eric Jordaan, financial planner and director of Crue Invest, says that according to the act, a surviving spouse is a beneficiary and stands to inherit from the deceased spouse’s estate if they die without a will.
“On the other hand, cohabiting couples enjoy no right of inheritance in terms of intestate succession, and this can leave them financially exposed should one of them pass away without a valid will,” he says.