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Marriage vs cohabitation: The different financial consequences

There are pieces of legislation that recognise the rights of cohabiting couples.

Many people who opt to live together rather than get married don’t fully understand the financial consequences of doing so. While cohabitation isn’t a recognised legal relationship in South African law, there are pieces of legislation that recognise the rights of cohabiting couples. Let’s have a closer look at the financial consequences of married couples as opposed to those who choose to live together.

Medical aid

In terms of the Medical Schemes Act 131 of 1998, a member’s spouse or life partner qualifies as a dependant on their medical aid, and this, therefore, includes cohabiting couples. If you are the principal member, you are able to add your partner as an adult dependant to your medical aid and gap cover. If you die, your registered partner will continue to be covered provided the premiums are paid. As such, it is important to ensure that you share financial responsibility and that your partner can continue paying the bills if you are no longer around.

Income tax

Couples who cohabit fall within the definition of ‘spouse’ as set out in the Income Tax Act, with this piece of legislation including a ‘same-sex or heterosexual union which the commissioner is satisfied is intended to be permanent’. Married couples and cohabiting couples, therefore, enjoy the same status from a taxpaying perspective. In the absence of any proof to the contrary, the definition provides that cohabitants are deemed to be in a union without community of property. This extends to donations tax which is not payable on donations made between cohabiting couples. 

Estate duty

In terms of the Estate Duty Act, the first dying spouse can leave assets to the surviving spouse without incurring estate duty. On the death of the second-dying spouse, she can make use of any unused portion of the estate duty abatement in the first dying spouse’s estate to offset any estate duty that her estate may attract. Although estate duty is levied at 20% on the first R30 million and at a rate of 25% above R30 million, the act provides that the first R3.5 million of your net estate is exempt. If the full estate is left to the surviving spouse, this exempt amount is rolled over to the surviving spouse, leaving her with an exempt amount of R7 million. However, this exemption only applies to partners who fall within the definition of ‘spouse’ which includes people who are in a marriage or customary union and same-gender or heterosexual unions that the commissioner of Sars recognises as permanent. If you are in a long-term relationship and are unsure whether your fall within the definition of ‘spouse’, it is recommended that you implement a cohabitation agreement, or prepare signed affidavits by both parties that can provide permanence.

Transfer duty

If you bequeath fixed property to your partner, bear in mind that she will be exempt from paying transfer duty in the event of your passing. This is because our law exempts heirs and beneficiaries from paying transfer duty on property inherited from a deceased estate – regardless of the nature of their relationship. Bear in mind, however, that your deceased estate will be liable to cover the conveyancing costs in respect of the property transfer.

Life insurance

As in the case of married couples, cohabiting couples are free to nominate each other as beneficiaries on their life policies. However, where a married person might nominate ‘spouse’ as the beneficiary, it is important that cohabiting partners specifically name each other as beneficiaries and refrain from using terms such as ‘partner’ or ‘common-law spouse’ in order to avoid confusion.

Retirement fund

As in the case of married couples, you are entitled to nominate your life partner as a beneficiary on your retirement fund. However, bear in mind that the distribution of your retirement fund benefits is done at the discretion of the fund trustees who will make a determination as to whether your nominated partner qualifies as ‘dependant’ in terms of the fund rules. When making a determination, the trustees will give consideration to anyone who was financially dependent on you in any way at the time of your death, keeping in mind that this could include aged parents, an ex-spouse, or children from a previous relationship.

Pension interest

If you and your partner live together, bear in mind that you will have no claim to his pension interest in the event that your relationship comes to an end. The right of a non-member spouse to claim a share of the member spouse’s pension interest is strictly governed by the Divorce Act, Pension Funds Act and Income Tax Act and is limited to couples who are legally married under an act of parliament. If a couple is living together as ‘husband and wife’ but are not married, there is effectively no marriage capable of dissolution and there can be no transfer of pension interest benefit.

Maintenance of children

Section 21 of the Children’s Act 2005 grants full parental responsibilities and rights to the parents of minor children, regardless of whether you are married or not. In terms of our law, both parents are responsible for the maintenance of their children regardless of their living arrangement. This means that if you and your partner live together and have children together, you have the same responsibility as a married person to care and contribute to the financial maintenance of your child. 

Spousal support

In terms of our law, living together confers no legal status on the relationship. This means that you and your life partner have no legal duties towards each other and, therefore, no duty of support. The absence of a legal duty to support each other means that, if your relationship comes to an end, you will have no legal claim for maintenance from your partner even if you were financially dependent on them during the course of your relationship. On the other hand, spouses who are legally married can rely on the provisions of Section 7 of the Divorce Act 1979 when claiming for maintenance following divorce. Similarly, when a spouse dies, the surviving spouse can make a claim against the deceased’s estate in terms of the Maintenance of Surviving Spouses of 1990. Couples living together can agree to the payment of maintenance in terms of their cohabitation agreement.

Bank accounts

Many banks now make it possible for cohabiting couples to operate joint bank accounts. However, bear in mind that for credit score purposes, you will be ‘co-scored’ on your joint bank account. This means that if your partner overspends or fails to manage the account responsibility, their behaviour could affect your credit rating.


In terms of the Intestate Succession Act 1987, 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. This can cause further complications where one of the partners dies intestate while still legally married to an estranged wife. If your partner dies without a will or leaves a will in which you are not named, you will need to engage in costly litigation to challenge the status quo.


Eric Jordaan

Crue Invest (Pty) Ltd

Do you have any questions you would like answered by registered financial planners?



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Thank you for this article. It’s a great article. It is very silent on casual relationships and erm hit and runs or pick up or single night stands.

I therefore assume there are no consequences for the arrangements above which make them attractive.

Lol…No..those are all covered under criminal law… Aslong as u don’t become famous or wealthy down the line – u should be fine.

End of comments.



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