As more South Africans choose cohabitation over marriage, financial experts are cautioning couples about the potential financial risks. According to Census 2022 data, six out of 10 people in the country were not married, while two out of 10 were legally married. This shift in relationship dynamics has significant implications for couples' financial security. Heather Muller, estate product head at FNB Fiduciary, notes that South African law does not recognise "common law marriage," leaving cohabiting partners without automatic rights to each other's assets, estates, pension benefits, or inheritance.
The consequences of not having a clear understanding of one's financial and legal position can be devastating, Muller warns. Couples often assume that sharing household expenses and raising children together automatically grants them rights to each other's assets. However, this is not the case. One of the biggest risks is property ownership, where one partner may pay the home loan and build legal ownership, while the other partner contributes to household costs without acquiring legal ownership. This can lead to difficulties in claiming an interest in the property when the relationship ends.
Death can also create a major financial trap for cohabiting couples. Many people wrongly believe that being in a long-term relationship means they will automatically inherit from their partner. However, unless a valid will or other specific legal arrangements are in place, an unmarried partner generally has no automatic right to inherit from a deceased partner's estate. Muller notes that this is one of the most common misconceptions among cohabiting couples, and the absence of a valid will can leave a surviving partner facing financial hardship.
Women, in particular, can be vulnerable to the financial consequences of cohabitation. Many women carry a greater share of childcare, caregiving, and household responsibilities, which can result in career interruptions, slower salary growth, reduced retirement savings, and lower long-term wealth accumulation. Ilse Smuts, also from FNB, notes that these contributions should not be mistaken for automatic financial protection. Couples must have difficult financial conversations before moving in together to ensure fairness, clarity, and financial security for both partners.
Experts are urging couples to discuss who owns existing assets, how household expenses will be divided, who is responsible for debts, their savings goals, retirement planning, and insurance cover. They should also agree on what will happen financially if the relationship ends. A formal cohabitation agreement can help set out the financial arrangements between partners. Couples should maintain independent savings and retirement plans, keep records of significant financial contributions, and ensure ownership arrangements are properly documented.
Regular reviews of wills and beneficiary nominations are also essential to ensure they reflect the couple's wishes. Smuts notes that seeking independent legal and financial advice can help couples understand the consequences of their arrangements. Having these conversations may feel uncomfortable, but they are essential for ensuring financial security. A cohabitation agreement is not about anticipating failure; it is about ensuring fairness and clarity for both partners.
While there are calls for stronger protection for long-term cohabiting partners, the current legal position means couples cannot simply rely on the length of their relationship for protection. The warning is therefore simple: living together may be a relationship decision, but it also has serious financial consequences. Love, trust, and commitment may be at the heart of a relationship, but without proper financial and legal planning, one partner could be left exposed when the relationship ends or tragedy strikes.
Key points
- Couples should have a formal cohabitation agreement to set out financial arrangements.
- Women are particularly vulnerable to the financial consequences of cohabitation.
- Couples should regularly review wills and beneficiary nominations to ensure they reflect their wishes.
