Marriage vs life partnership: Financial advantages and disadvantages of each
The decision to get married can be as important as the decision not to because there are significant financial implications for either option. Whether you choose the route of a legally recognised marriage or elect to live together as life partners, it’s vital that you understand what it means for you financially. The legal and financial consequences of marriage versus life partnership differ – vastly so. Before you make a decision either way, be clear on the advantages and disadvantages of each.
Our law makes provision for a number of marriage forms, including civil marriage, civil union, or a customary marriage.
Civil marriage, which is entered between and man and woman, is the most common form of marriage. All couples, whether heterosexual or same-sex, have the option of a civil union marriage which enjoys the same rights, responsibilities and legal consequences as civil marriages. There is essentially no difference between a civil marriage and a civil union.
The Recognition of Customary Marriages Act of 1998 provides legal recognition for those married in terms of African customary law. In terms of this piece of legislation, legal recognition is provided for both monogamous and polygamous customary marriages, provided that the marriage is celebrated according to the prevailing customary law of the community.
Civil marriages, civil unions and customary law marriages must all be registered with the Department of Home Affairs. The default matrimonial property regime for all three types of marriage is ‘in community of property’. Where a couple chooses to get married out of community of property, they must enter into an antenuptial contract wherein they can either include or exclude the accrual system.
Where a couple chooses not to get married in accordance with any of the above, they will be deemed life partners and will receive limited legal recognition or recourse as a result thereof.
It is important to keep in mind that there is no such thing in our law as a ‘common-law spouse’, and no legal status is conferred on couples who choose to live together without getting married.
In some areas of our legislation, however, the term ‘spouse’ has been broadened to include life partners, such as the Medical Schemes Act, Domestic Violence Act, and the Income Tax Act.
Let’s have a closer look at the advantages and disadvantages of marriage versus life partnership.
The advantages and disadvantages of marriage
When it comes to legal and financial protection, there are undoubtedly more advantages to being married. This is because our law recognises the legal consequences of marriage, and the institution is protected by a number of key pieces of legislation, including the Marriage Act, Matrimonial Property Act, Divorce Act, Maintenance Act, Civil Union Act, and the Maintenance of Surviving Spouses Act. Further, through our case law, it is clear that our courts have long emphasised the importance of marriage as a social institution and the valued rights and duties that flow from it – with one of the most important legal consequences being the reciprocal duty of support between spouses. This duty of support rests on both spouses according to their respective means.
The Matrimonial Property Act is advantageous in that it provides marrying couples with a number of options when structuring their marriage contracts, most notably the option to customise an antenuptial contract (ANC) which is designed to set out the unique financial consequences of their marriage. Unless explicitly excluded in their ANC, a couple will be married with the accrual system, which is generally recognised as the most equitable marital regime as it allows each spouse to share equally to the extent that their respective estates grew during the subsistence of the marriage. When drafting their ANC, a couple can choose to expressly include or exclude certain assets from the accrual, such as a retirement fund, inheritances, or immovable property.
That said, over and above the reciprocal duty of support that married spouses owe to each other, other significant advantages of marriage lie in the areas of pension fund benefits, spousal maintenance, and estate planning. Where a couple gets divorced, the Maintenance Act makes provision for the economically weaker partner to claim maintenance from their ex-spouse which is then made an order of the court. Further, where the first-dying spouse has not made adequate financial provision for the surviving spouse, the Maintenance of Surviving Spouses Act provides the surviving spouse with legal recourse to claim for maintenance against the deceased estate.
Another notable advantage that married spouses have is the right of a non-member spouse to claim a share of the member’s spouse pension interest in terms of the Divorce Act.
The right 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. The marital regime under which a couple is married will impact on such a claim in terms of the Divorce Act. Where a couple is married in community of property, the pension interests of each spouse will form part of the joint estate, and each spouse will be entitled to claim 50% of the pension interest at the date of divorce. In circumstances where a couple is married out of community of property with the accrual, each spouse’s retirement fund value will be taken into consideration when determining the value of their respective estates for accrual purposes.
Importantly, married couples also enjoy protection when it comes to intestate succession in the event that either spouse dies without a valid will. The aim of intestate succession is to provide a strict set of guidelines for the order and proportions in which your assets will be distributed, with your spouse and children always benefiting first.
That said, there are some financial disadvantages when it comes to legal marriage, especially where a marriage is in community of property. In community of property is a deeply flawed marital regime in that each spouse becomes jointly and severally liable for all debt, including that which was incurred before the date of marriage. As there is only one joint estate, a spouse to an in-community-of-property marriage is able to bind the other spouse through their actions, which can lead to insolvency of the joint estate. Where spouses are legally married, they are bound to follow formal divorce proceedings in order to legally separate from each other, and divorce proceedings can be slow, cumbersome, and expensive. Further, while an ex-spouse has the ability to claim maintenance, the process can be inefficient and time-consuming as a result of overburdened maintenance courts.
The advantages and disadvantages of life partnership
For couples choosing a life partnership instead of legal marriage, the ability to keep their respective finances totally separate can be considered advantageous, especially where each partner is financially independent. Unlike a community of property marriage, couples choosing to live together can keep their debt totally separate and cannot bind each other through their actions. Cohabiting couples enjoy no legal recognition and, as a result, have no financial duty to support each other either during the relationship or after the relationship has terminated. While some may view this as an advantage, it can be inequitable especially where one partner has stopped working or limited their career in order to raise children.
Further, although cohabiting couples may be of the opinion that terminating a relationship is much easier in the absence of a marriage certificate, this is not always the case – especially where immovable property is involved.
Where the primary residence is registered in the name of one partner, the other partner can find themself homeless if the relationship comes to an end – and they will not have any legal recourse against their ex-partner. Further, they will have no claim to maintenance from their ex-partner even if they stopped working to raise the children.
Importantly, there is no right of intestate succession between cohabiting couples regardless of how long they have lived together. This means that, where one partner dies without a valid will, the surviving partner is not automatically regarded as an heir or dependant. This can leave the surviving partner in a financially vulnerable position that could have been avoided.
To provide each other with some form of legal protection, cohabiting couples can draft what it referred to as a cohabitation agreement wherein they can document the financial consequences of their relationship and how their respective assets will be dealt with should the relationship come to an end. A well-drafted cohabitation agreement can be used to document arrangements in respect of finances, immovable property, movable property acquired during the course of your relationship, and children – and your general financial responsibilities towards each other.
Whether you choose legal marriage or cohabitation, the most important consideration is that you fully understand the legal and financial implications of your decision and that you take all steps available to protect your financial future.