SO WHEN AM I AUTHORISED TO ACT AS TRUSTEE?March 24, 2016
THE LIVING WILLMarch 24, 2016
In South African law there is no such thing as a common law marriage. People simply believe that living together with another person for a continuous period of time establishes legal rights and duties between them. This is a common misunderstanding especially with young adults.
The only way to be protected in our law is to enter into a universal partnership agreement. Such an agreement clarifies the rights and duties of the partners. The agreement will determine what would happen to property and assets of the couple if they should decide to separate. The agreement is, however, not enforceable in so far as third parties are concerned. Only a valid marriage is enforceable against third parties. It is important to note that partners can sometimes be jointly and severally liable if they acted within the scope of the partnership. An agreement such as this will be legally binding as long as it contains no provisions that are immoral or illegal. If there is no agreement on the dissolution of a universal partnership agreement, a party would only be entitled to retain those assets which he or she has purchased and owns and further would be entitled to share in the assets proportionately in terms of the contribution which they have made to the partnership.To prove the existence of such a partnership it must be shown that:
- The aim of the partnership was to make profit.
- Both parties must have contributed to the enterprise.
- The partnership must operate to benefit both parties.
- The contract between the parties must be legitimate.
- There must be valid consent.
- There is an intention to create a legally binding agreement.
Where there is no express agreement, a tacit agreement may be proved if it is found that it is more probable than not that such an agreement had been reached between the parties at the time of cohabitation.
Because the existence of a universal partnership is somewhat difficult to prove, and it may not be a claim that you wish to have to make or defend, it is advisable to consider entering into a contract that spells out how property should be dealt with on termination of the relationship by death or otherwise. Such a contract would provide some certainty for cohabitees regarding the division of assets and settlements of liability on termination of the relationship.
Some of the consequences of the absence of a legal ground between parties in such relationships are:
- No exemption from donations tax in respect of donations between them.
- Cohabitees do not benefit from the laws relating to the exemption from estate duty of bequests to spouses.
- There is no reciprocal obligation of maintenance.
- Cohabitee is not a recognised claimant if his/her partner dies intestate.
- There is no right to property or assets that belong to cohabitee.
- There is no reciprocal duty to contribute to household necessities.
The Domestic Partnerships Bill of 2008 is still in its formulation stage and it remains to be seen how it is to be implemented. In the current constitutional dispensation it is unlikely that a partner will be left in despair, taking into account the Domestic Partnerships Bill.
This article is a general information sheet and 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 your financial adviser for specific and detailed advice. Errors and omissions excepted. (E&OE)