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Living together? Protect yourself financially

17 May 2022
4 minute read
Couple sitting in their new home

You’re in a wonderful, loving relationship. You live together but you’re not married. You can picture your future. It seems impossible that there will ever be a day when you and your partner aren’t fully committed and deeply in love. Even if this describes your situation perfectly, bear in mind that if you are not legally married, the law doesn’t recognise the commitment you have to one another. For this reason, you need to discuss your joint finances, and protect yourselves with a cohabitation agreement.

Here’s how to protect yourself financially – during the relationship and after.

The legal status of your relationship can affect you financially

South African law does not formally recognise “common-law marriages”. While you may be living together and fully committed to a relationship with your partner, legally you have very little protection, which can leave you financially vulnerable. For example, if your partner owns the home you live in and you split up, you won’t have a claim on the property. If you want to claim a share, you would probably have to go to court – with no guarantee of success and a more-than-likely high legal bill.

However, there is a way to protect yourself financially if you are not married to avoid this situation. All you need to do is draw up and sign a cohabitation agreement.

Cohabitation agreements protect couples living together

A cohabitation agreement is simply an agreement – a legal contract – in which each party agrees on how to deal with financial matters and assets during their relationship – and if it unfortunately comes to an end. For example, how will you share living expenses, who will pay what costs, where will you live and what will happen to the property you share if you split up? Cohabitation agreements should also deal with each individual’s assets, such as any property they already own, investments and goods and appliances – everything from the car to the couch!

Cohabitation agreements should be drawn up and signed when you move in together, or just before. However, if you don’t have an agreement and are already living together you should draw one up as soon as possible!

You can download Law For All’s cohabitation agreement and complete it, or set up an appointment with an attorney for assistance.

Top tip: Make sure your agreement is signed, witnessed and dated!

Your cohabitation agreement should include details of:

Assets: Consider those assets you currently own and future ownership. For example you can maintain individual ownership of properties or other assets you already owned, but can jointly own any assets you buy while you are living together. If you split up, you each take what you had when you started the relationship and share what you bought together.

Living expenses: Decide on exactly what these are and how you share these, for example 50/50, or in accordance with earnings, and how you pay them – for example from a shared bank account to which you each contribute a certain amount each month. Living expenses are everything from rent and home loan repayments and utility costs (electricity and water) to food and transport costs. Decide upfront whether clothes are a living expense or not to avoid the shoe or sneaker obsession becoming the source of a financial fight!

Family commitments: Who pays for what, and what will you each pay for in emergency situations?

Insurance, medical aid, savings and investments: You should be able to save money by sharing medical aids and short-term insurance contracts, but investigate this thoroughly first. And be clear on who pays what and what happens in the event of unpaid premiums. Also decide if you will save and invest together or separately, and what happens to joint and individual savings if you end the relationship.

A cohabitation agreement isn’t only useful for when you split up

Cohabitation agreements will set clear guidelines for how to deal with the financial side of a break up. However, this is not their only use! Even people with shared values and beliefs have different ideas on how to earn, spend and save money. As a result, couples disagree about money often – and it can become a problem. A cohabitation agreement can set some clear money guidelines so you know who pays for what, and what you share as a couple. This won’t prevent all the money squabbles, but it can give you a head start when it comes to managing your money together.

Review your agreement regularly

Earnings and commitments change over time. Your side hustle may take off and turn into a successful small business, or your partner may lose their income, or you may add a new member to your family (Congrats!) or start caring for an elderly relative or pay a sibling’s school fees. These can dramatically change your financial commitments, so when they happen, or at least every year, review your cohabitation agreement to see if it still makes sense or needs some adjustments to reflect the changes that have taken place.

Protect yourself and your financial future

Whether you and your partner stay together forever or part ways in the future, you need to discuss your joint finances and protect yourselves financially now. Your cohabitation agreement gives you financial guidelines and financial certainty. Plus, it’s a great way to formally acknowledge that you are together and committed!

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