NEXT month officially marks National Estate Planning Month. There are no guarantees in life, however, being prepared for one of its unavoidable events– like death – makes a difficult experience more manageable for those left behind.
Discovery Life head of legal services Harry Joffe says this preparation comes down to two things: estate planning and having an up-to-date, valid will in place.
He says according to 2022 statistics from the Master of the High Court, only 15% of South Africans have a valid will.
“Estate planning – which ensures your affairs can be easily wound up when you pass away – also looks different depending on your family make-up,” he says.
A lot has been written and said about how to protect your children, spouses, and family, and I feel that a lot is not being explained about how unmarried couples can navigate estate planning.
I had a conversation with my mom, and she was telling me how when she was young, a lot of couples would be in relationships for many years without getting married. She said for some of these couples, when death comes knocking, the surviving partner is left mostly destitute.
Today, many couples choose to remain unmarried while they sometimes live together.
I have also seen on social media how some users still believe that if you are with someone for six months, you are officially entitled to your partner’s estate. This is not true, as in South Africa we do not have common law marriages.
Stacy Rouchos, an estate planning consultant at Hobbs Sinclair, says a client of hers was recently left in a predicament after losing his partner of 22 years.
“The red tape and legal complexities surrounding the administration of a deceased estate, especially for an unmarried partner as opposed to a legal spouse, served as a stark reminder of the importance of organising one’s affairs at every stage of life,” she says.
Rouchos says that it often happens that unmarried couples mistakenly believe they are protected as “common law” spouses and, as such, are afforded the same level of protection as married couples regarding inheritances and taxes. However, South Africa does not recognise the concept of common-law marriage.
“Simply living with a partner for an extended period, even with children, does not necessarily lead to financial protection. Although civil marriages are the most common form of marriage in South Africa, customary marriages, religious marriages, and civil unions all carry most of the same protections and financial benefits as a civil marriage.
“However, many South Africans live together under the implicit assumption that their years of partnership and cohabitation mean they will enjoy the same rights and protections afforded to married couples. This is simply not the case," Rouchos says.
According to Rouchos, if you are not married and do not have a cohabitation or universal partnership agreement, you and your partner are not legally entitled to any share of each other’s estate, either upon separation or death.
"Even during the relationship, an unmarried couple will not receive the same benefits as a married couple unless a written agreement proves they are life partners. This means, for example, that donations tax applies to donations between partners, any assets received in a will from one partner will be liable to Capital Gains Tax and estate duty, and any inherited properties will have transfer duty levied on them.
"Unmarried partners also cannot inherit as intestate heirs under the Intestate Succession Act or claim maintenance from the deceased estate of their partners, even if they are life partners. Although maintenance for children can be claimed, provided the child is born of the union between the couple, this can often be inadequate to fully provide for a partner and their children, especially compared to the maintenance provided to married couples," she says.
Rouchos says that drawing up a will or entering into a formal agreement or contract between the parties can help protect your partner to ensure that they are taken care of.
“Without such protection, your partner may not benefit from any assets you leave or even be able to stay in the home after your death,” she says.
Meanwhile, two acts are set for amendment within the next few months that may extend the definition of “spouse” to include any life partner. This has pros and cons. It could mean your partner has an automatic claim to inherit a substantial share of your estate should you die, even if you have not been together for very long.
Family, let’s get our houses in order so that when the inevitable happens, we are not caught off guard.
* Maleke is an editor of Personal Finance.
PERSONAL FINANCE