Estate Planning and unmarried couples

Living in a country as culturally diverse as South Africa, one witnesses the different types of relationships there are. Gone are the days where only marriages in the traditional sense exist. Unmarried couples in a permanent life partnership (whether by way of agreement or tacitly) may be entitled to certain rights which are enjoyed by married couples.

On December 31 last year, the Constitutional Court handed down a judgment (the “Bwanya judgment”) which saw a development in the succession and maintenance laws, particularly in respect of unmarried heterosexual couples. Jane Bwanya and her partner (the deceased) had been in a committed romantic relationship and enjoyed the “reciprocal duty” of support. Bwanya’s partner provided for Bwanya in terms of care and emotional support. The couple intended to get married, but Bwanya’s partner died before they could do so, and didn’t leave any surviving heirs. His estate was therefore subject to the rigid rules of inheritance regulated by the Intestate Succession Act.In light of this, the question was whether Bwanya could inherit as a life partner from her partner’s deceased estate.

Before we deal with the judgment, there is a misconception regarding the principle of a “common law spouse” or “life partner”. In South Africa, we don’t follow such a principle. Being in a life partnership doesn’t create such a principle either. The case came before the Western Cape High Court, which declared section 1(1) of the Intestate Succession Act to be unconstitutional but rejected the challenge to the constitutionality of section 1 of the Maintenance of Surviving Spouses Act.

It was then taken on appeal to the Constitutional Court, which stressed that “permanent life partnerships are a legitimate family structure in South Africa”. The Constitutional Court also declared section 1 of the Maintenance of Surviving Spouses Act unconstitutional and invalid, and that the word “partner/life partner” is to be read inclusively with the definition of spouse. What does this mean for fiduciary specialists and estate planners? We break it down into three categories: tax benefits and advantages, deceased estate administration, and maintenance laws.

Tax benefits and advantages

The Bwanya judgment didn’t create avenues for life partners to enjoy tax benefits as spouses do. This is because life partners already enjoy such benefits. One can say that the Bwanya judgment simply amplified our knowledge and experience in the existing laws in its inclusivity of life partners. The Income Tax Act includes a life partner in the definition of spouse. This extends to donation tax, which isn’t payable on donations made between life partners. The Estate Duty Act also provides for the inclusivity of life partners upon one’s demise. A Section 4(q) deduction is enjoyed by the surviving life partner should the deceased leave their entire estate to the surviving life partner. Should you bequeath property to a life partner, that person is deemed to be an heir to the estate, and therefore exempt from paying transfer duty.

Deceased estate administration

The Bwanya judgment specifically pertains to the administration of intestate estates. The judgment may allow for the administrator or the Master of the High Court to include life partners under section 1(1) of the Intestate Succession Act, and the survivor may inherit as such. However this case and its facts, including previous judgments, primarily relate to the parties’ intentions to marry before the demise of one of them. Although there is no precedent for life partners who merely intend to remain cohabitants, one can indeed “test the waters” for an intestate inheritance claim as a surviving life partner.

Maintenance laws

A noteworthy ruling in this judgment pertains to South African maintenance laws. Maintenance creates a “reciprocal duty” between spouses and parent and child. The Maintenance of Surviving Spouses Act allows for maintenance to be claimed by a surviving spouse (whether the estate is testate or intestate), and is usually done through a redistribution agreement. Prior to the Bwanya judgment, life partners couldn’t claim maintenance from their partner’s deceased estate. Declaring section 1 of the Maintenance of Surviving Spouses Act to be invalid and unconstitutional has now allowed life partners to have a claim against their partner’s deceased estate. This includes testate estates. One could infer that the inclusivity of life partners in the definition of spouse in the Maintenance of Surviving Spouses Act creates a “reciprocal duty” for a maintenance claim, but exclusively relates only to deceased estates.

Currently, maintenance and the concept of reciprocal duty is not enjoyed when life partners have dissolved their partnership while still alive. So, they can’t approach a maintenance court after having dissolved their partnership, and a maintenance order cannot be sought.

Conclusion

Life partnerships are being recognised in certain aspects of our law, and are being recognised as another type of “marital regime” in South Africa. If you’re considering entering into a life partnership, it’s important to understand the advantages and benefits when discussing your estate planning. It’s best to not only speak to your financial planner in that regard, but also to seek advice from an attorney who can advise you on setting up a universal partnership agreement and explain the rights you may enjoy from such an agreement.

Abrahams is the legal adviser at BDO Wealth Advisers.