“An ounce of prevention is worth a pound of bandages and adhesive tape.” (Groucho Marx)
It’s a perennial topic of dispute in our courts. A couple lives together, sharing the same roof and everything else in perfect happiness and harmony.
Until it all goes south. Then the gloves come off and, particularly if our erstwhile couple end up dragging each other through the courts, everyone takes a beating. Bloodied, battered and bandaged, they’re going to wish they’d implemented Groucho’s “ounce of prevention” in the first place.
We’ll explain how to keep things amicable. But before we do, let’s consider the case of the life partner who failed to persuade a court to give him a cut of his ex-partner’s house.
Trying to prove a “universal partnership”
Bearing in mind that our law recognises no such concept as “common law marriage” (a pervasive and dangerous myth that just won’t go away), many an ex-life partner has fallen back on trying to prove that the couple had formed a “universal partnership”. Depending on the type and form of the partnership they claim existed, that would give them a cut of the assets of their relationship. But it isn’t easy to prove.
The facts in a recent Limpopo High Court fight illustrate this point. A couple in a romantic relationship had lived in the woman’s house with her daughter. Each of them contributed equally towards household expenses. They decided to extend the house, and the man contributed R416k out of his pension payout for this purpose.
When their relationship broke down after five years, the man tried to convince the Court that a universal partnership had been formed between them, and he asked for a liquidator to be appointed to divide the partnership’s assets equally between the partners.
The Court’s thorough analysis of the law relating to universal partnerships (there are actually two types, both with fancy Latin names) will be of major interest to lawyers. But what really matters most to you on a practical level is that:
- The onus is on you to prove that a partnership existed, and its terms.
- You must prove that you agreed to pool your assets in order to make a profit.
- A universal partnership needn’t be agreed to in writing – it can be formed verbally, by consent, or by the conduct of the parties. That requires inferences to be drawn so it’s a recipe for misunderstanding and dispute. Without a written agreement it’s never easy to prove and our case law is littered with failed attempts.
- Perhaps the most pertinent factor of all is this comment by the Court (emphasis added): “The mere fact that parties cohabitate does not entitle them to a proportionate share of the other party’s estate.”
In the end, the applicant failed to prove that the relationship had been anything more than cohabitation, so he leaves with nothing (other than, of course, a large legal bill).
An ounce of prevention…
All that litigation and unhappiness could have been prevented had the parties, when they first decided to live together, entered into a cohabitation agreement.
Don’t make the same mistake, and be sure to draw up a document covering, at the very least, the following aspects of your relationship as they apply to you:
- When your relationship began or when the agreement takes effect.
- List who owns what both before and during cohabitation (furniture, vehicles, investments and so on).
- Who is responsible for which debts.
- Who owns (or rents) your house, who will pay the bond instalments if any, who will pay for what upkeep, who will pay for any major extensions or repairs, and so on.
- Who will pay what in ongoing contributions to shared living expenses.
- Will you use joint bank accounts and, if so, how will you manage them?
- Will you run your own businesses, a joint business, or no business at all? What will you each contribute, what will you each take out, how will you manage the business/es?
- Who will be responsible for the children’s financial support, schooling etc?
- If your relationship ends:
- How will you terminate it?
- Who will get which assets?
- Who will be responsible for which debts?
- How will you terminate any business relationship you have?
- Will either of you be entitled to ongoing spousal maintenance?
- What happens to your children, to their financial support, and to your parental duties and rights of contact?
- Think of adding a dispute resolution clause to kick in if you can’t agree on anything.
- Anything else? Your circumstances are going to be unique to the two of you, so brainstorm for anything else (who gets the pets, for example) that you’d like to record or agree on at this stage.
Herein lies the rub
Setting out an agreement doesn’t mean you’re planning for failure! In fact, you’re increasing your chances of success. Break-ups are a fact of life, and even if you do grow old and wrinkly together, your cohabitation agreement will still come into its own when one of you dies.
On that note, don’t forget to make or update your will (“Last Will and Testament”) at the same time. Both documents are essential, and the two must be compatible with each other, so make a big note to review/update both together.
Bottom line: you and your life partner should have a cohabitation agreement as well as wills. We’ll help you put all that together.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.
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