A Valentine’s Day Thought for Life Partners: What is a “Universal Partnership”?

A Valentine’s Day Thought for Life Partners: What is a “Universal Partnership”?

“Marriage is the chief cause of divorce” (Groucho Marx)

This Valentine’s Day, think about the legal aspects of your romantic relationship. They’re a lot less exciting than the traditional declarations of love backed up by chocolates and flowers, but they’re just as important in ensuring a strong, committed life partnership in which both of you is clear as to how your respective financial and legal responsibilities are defined.

A recent High Court decision once again puts a spotlight on the fact that “life partner” couples are at ongoing legal and financial risk unless they sign both cohabitation agreements and updated wills.

The problem – there’s no such thing as a “common law marriage”

Our law does not recognise the concept of a “common law marriage”. Either you are formally married, or you miss out on many of the legal protections available to married couples. The result – if you split, or when (not if) one of you dies, the less financially strong life partner could well be prejudiced, perhaps even left destitute after many decades of life together.

The solution – a cohabitation agreement with updated wills

Luckily these two documents give both of you quick and effective protection –

  1. A cohabitation agreement tailored to meet your particular circumstances and needs. It should at the minimum cover questions such as whose name assets and liabilities will be in, who will cover what expenses, how you will split your financial affairs if you part ways, your undertakings to each other regarding financial support and maintenance, parental rights and duties regarding children and so on.
  2. A will (“Last Will and Testament”). You could make two separate wills or one joint one but either way make sure to comply with all formalities to ensure validity and set out your respective wishes clearly and unambiguously. A vital (and all-too-often overlooked) aspect here is to diarise regular reviews of your will/s in case they need updating to take account of ongoing life and financial changes.

Let’s turn now to a “second prize” alternative – proving a “universal partnership”.

What is a “universal partnership” and how do you prove it?

If for whatever reason you don’t have both a cohabitation agreement and wills in place, you may still have a “get out of jail free” card in the form of a universal partnership.

These extracts from the High Court judgment (formatting supplied) set out what you’ll need to prove –

  • “A universal partnership is an agreement between individuals to share their property and their gains and losses. The partnership need not be formed for a commercial purpose.
  • It regularly comes into existence, whether expressly or tacitly, between unmarried cohabitees, although cohabitation is not essential.
  • The requirements for the existence of a universal partnership are the same as those for partnership in general.
  • Where a tacit universal partnership is alleged, a court will confirm its existence if the conduct of the parties is such that it is more probable than not that such a partnership agreement had been reached between them.
  • A partnership exists if “each of the parties brings something into the partnership or binds themselves to bring something into it, whether it be money, or labour, or skill”; if the agreement is struck for “the joint benefit of both parties”; and if the object of the partnership is material gain.
  • The question is … whether, on evaluating those facts as a whole, the probable inference is that there was a universal partnership.”
A bitter family fight shows why it’s second prize
  • In the case in question, life partners had for 26 years shared all their assets “akin to a marriage in community of property”. Importantly, they had shared the “benefits and burdens” of a number of property development ventures. They had, said the Court, each brought something into the partnership, her contribution being mostly financial, his (as an architect) mostly in “sweat equity”. Their partnership was not just a life partnership, it “was also plainly at least partly about material gain.”
  • Their relationship was terminated by the death of the one partner, who died “intestate” (leaving no will in place) after developing dementia. The other partner had suggested they each execute wills leaving everything to each other and he had done so, but she had declined as she was unwilling to contemplate her mortality
  • Her daughter as executor of her mother’s deceased estate refused to recognise any claim by the surviving life partner. Quarrels and evictions followed, with ultimately a hard-fought High Court battle.
  • The Court found that the survivor had on the facts succeeded in proving the existence of a universal partnership. Critically, it held that the parties’ partnership “was also plainly at least partly about material gain” and that the surviving partner should anyway inherit half of the deceased’s estate in terms of a principle previously accepted by our courts that “partners in a permanent life partnership in which the partners have undertaken reciprocal duties of support are entitled to inherit as spouses would.”
  • Accordingly, the survivor gets a full half of the deceased partner’s entire estate, whilst the daughter is removed as executor and ordered her to pay the legal costs.
The winner is…

The bottom line however is that the element of “material gain” which so clearly applied to the joint acquisition of assets in this particular life partnership will be absent (or at least extremely difficult to prove) in many other cohabitation agreements.

First prize must therefore always be to avoid the risks, delay, stress and cost of trying to prove the existence of a universal partnership and/or reciprocal duties of support by having in place both a comprehensive cohabitation agreement and a joint will or reciprocal wills.

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 your professional adviser for specific and detailed advice.

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How Does the New Divorce Act Ruling Affect You?

How Does the New Divorce Act Ruling Affect You?

Media reports of the recent Constitutional Court decision holding a section of the Divorce Act unconstitutional and giving Parliament 24 months to remedy that haven’t always been clear about who needs to be aware of this, and who doesn’t.

Firstly, understand the three “marital regimes” available to you

Legally, marriage amounts to a binding contract, and you have the right to choose between three possible “regimes” –

  1. Marriage in community of property: All of your assets and liabilities are merged into one “joint estate” in which each of you has an undivided half share. On divorce or death the joint estate (including any profit or loss) is split equally between you, regardless of what each of you brought into the marriage or contributed to it thereafter. This is the “default” regime – so you will automatically be married in community of property if you don’t specify otherwise in an ANC (ante-nuptial contract) executed before you marry.
  2. Marriage out of community of property without the accrual system: Your own assets and liabilities, both what you bring in and what you acquire during the marriage, remain exclusively yours to do with as you wish. Note here that the “accrual system” (see option 3 below) will apply to you unless your ANC specifically excludes it.
  3. Marriage out of community of property with the accrual system: As with the previous option, your own assets and liabilities remain solely yours. On divorce or death however you also share equally in the “accrual” (growth) of your assets (with a few exceptions) during the marriage.
Secondly, what’s the new ruling all about?

If you were married out of community of property (a) without the accrual system (option 2 above) after (b) 1 November 1984, you previously could not ask the court for a “redistribution order” – a reallocation of assets between spouses to ensure a fair split. Your marriage could end (be it through divorce or death) with one of you in a strong financial position and the other in a dire financial position, with a court having no discretion to help the spouse with less or no assets. You could literally be left destitute after possibly decades of marriage, with no redress and no claim against your spouse’s assets.

A 2021 High Court order (now confirmed in a Constitutional Court decision) declared unconstitutional the section of the Divorce Act which led to that unhappy state of affairs, so that you can now ask the court for a redistribution order no matter when you were married.

What does it mean in practice?
  • Does this change affect you? The change does not affect you if you were married –
    • In community of property (option 1 above), or
    • Out of community of property with accrual (option 3 above), or
    • Out of community of property without accrual (option 2 above) before 1 November 1984.

    The change does affect you if you were married out of community of property without accrual (option 2 above) after 1 November 1984.

  • What new rights do you have? You now have the right – previously denied to you – to apply for a fair, court-ordered asset redistribution between spouses.
  • Are you automatically entitled to a redistribution of assets? No – you will have to convince the court that “it is equitable and just by reason of the fact that the party in whose favour the order is granted, contributed directly or indirectly to the maintenance or increase of the estate of the other party during the subsistence of the marriage, either by the rendering of services, or the saving of expenses which would otherwise have been incurred, or in any other manner.” In other words, you must prove what contributions you made to the marriage to justify your claim to redistribution.
  • Will the court take anything else into account? What about what you agreed to in your ANC? Importantly, the court can take into account “any other factor which should in the opinion of the court be taken into account”. What you agreed to in your ANC is bound to be a consideration, and as the Court here put it: “This is as wide as can be.The fact that the parties concluded an antenuptial contract excluding the accrual regime could be taken into account.The weight this factor should receive would depend on the circumstances.” Bottom line – the court can take anything relevant into account, including what you agreed to at the time of your marriage.
About to marry?

Which all confirms the importance of making the correct legal choices before you marry to avoid uncertainty, heartache and dispute down the line. Take professional advice on which option is best for you!

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 your professional adviser for specific and detailed advice.

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Dementia: Understanding Your Legal Options

Dementia: Understanding Your Legal Options

“Dementia is the plague of our time, the disease of the century” (Unattributed)

Dementia is a widespread medical condition that affects people of all ages but particularly the elderly, and includes conditions like Alzheimer’s. One of the most significant challenges of dementia is the loss of mental capacity, making it difficult for individuals to make crucial decisions, including those related to their legal affairs, finances and care. This can be particularly problematic when family members are unprepared or unaware of the practical and legal implications.

Beware the Power of Attorney myth

One common misconception is that a signed Power of Attorney (PoA) can authorise a family member to take control of the individual’s financial affairs in perpetuity. In fact, a PoA is only valid as long as the person who granted it maintains “legal capacity”, in other words an understanding of its implications. If and when dementia kicks in, the PoA automatically becomes invalid.

Enduring Powers of Attorney, which continue even after someone loses legal capacity, are valid in some countries but are unfortunately not yet recognised in South Africa.

So, what are your legal alternatives for dealing with dementia?

You will typically have three legal options available –

  1. Curatorship: This involves appointing a curator bonis through a High Court order to manage the financial affairs of the person with dementia (a curator ad personam may in rare cases also be needed to manage the person’s personal affairs). This process can be complex and expensive, but in some cases it may be the only viable option available.
  2. Administration: Similar to curatorship but less complex, less expensive, and quicker, this involves an application to the Master of the High Court for the appointment of an Administrator.It is only available when your family member is a “mentally ill person or person with severe or profound intellectual disability”, which excludes cases of purely physical frailty or disability, and suggests that in cases of mild dementia or mild cognitive impairment only curatorship is an option – but take legal advice on your specific circumstances. An extra element of cost and delay applies in larger estates, in that the Master must commission an investigation into any application where the assets involved are over R200,000 and the annual income is over R24,000 p.a.
  3. Special Trust: An alternative option is to consider a trust or special trust, which can be established if your family member suffers from an early onset of dementia but is still lucid and has legal capacity. All trusts have advantages in that they allow individuals the freedom to choose upfront who the trustees will be and what powers and duties they will have, whilst special trusts come with significant tax benefits over ordinary trusts. Individualised professional advice is essential here.

Understanding the available legal avenues can help you navigate this difficult journey, and with proper planning, personalised legal advice and early action, you can ensure that your family member’s legal and financial well-being is protected at all times.

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 your professional adviser for specific and detailed advice.

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Divorce: What is Forfeiture of Benefits and When is it Ordered?

Divorce: What is Forfeiture of Benefits and When is it Ordered?

“So often, a party in a divorce is so aggrieved and upset by their spouse’s behaviour during the marriage, and rightfully so, that they cannot fathom having to give up an asset or let their spouse benefit in any way, upon divorce. We have had numerous spouses wanting us to apply forfeiture of the benefits of the marriage based on the other spouse’s bad behaviour during the marriage.” (Extract from one of the High Court judgments below)

Divorce all too often involves high levels of stress, antagonism, dispute and desire for revenge. So, when it comes to splitting up the marital assets, the thoughts of one (or both) of them may well turn to something like “It’s their fault, I want more than just my share, in fact I want everything”.

Which is where the concept of “forfeiture of benefits” (sometimes referred to as “forfeiture of assets”) comes in. It’s an old concept in our law and is increasingly being applied for in our courts, as evidenced in several recent cases which have received wide media coverage. But what exactly does a forfeiture order entail?

What is a forfeiture of benefits order?

The court in granting a divorce has a discretion, in appropriate cases, to order that one party forfeits either all the assets of the marriage, or a specific asset or assets. This overrides both the effect of the “marital regime” of the marriage (in community of property, out of community of property with accrual, out of community of property without accrual) and anything agreed to by the parties in their ANC (ante-nuptial contract).

When will a court order forfeiture?

Forfeiture orders are the exception not the rule, and the onus is firmly on the party claiming forfeiture to establish the basis and amount of their entitlement to it.

The Divorce Act provides that, where a divorce is granted on the grounds of irretrievable breakdown of the marriage, the court may order forfeiture if it is satisfied that one party will otherwise be “unduly benefitted” in relation to the other (the party claiming forfeiture will have to establish the “nature and extent” of that undue benefit). The court will take into account –

  • The duration of the marriage,
  • The circumstances that caused the marital breakdown, and
  • “Any substantial misconduct on the part of either of the parties”.

That gives the court a wide discretion, and every case will be different, but let’s have a look at three recent High Court decisions to illustrate some typical scenarios in which forfeiture was successfully applied for –

  1. A cheating husband loses his share of accrual
    A couple were married out of community of property with accrual. On divorce, that would normally result in a balancing between the parties of the asset accrual during the marriage, but in this case, in granting the wife a divorce from her husband after 12 years, the High Court ordered that the husband “forfeits the patrimonial benefits of the accrual system in total”, including his interest in the wife’s business.

    The Court’s decision followed its findings that the husband was guilty of “shockingly egregious” misconduct during most of the marriage, including living away from home, failing to “contribute to the common home financially, emotionally, or in any other manner”, engaging in a long string of extra-marital affairs and attempting, whilst employed in his wife’s successful business, firstly to fraudulently extort money from it and secondly to hijack the business.

  2. A short marriage ends, and the wife gets nothing 
    Here, the High Court ordered that a wife forfeit her share of the joint estate assets (with “in community of property” marriages a joint estate is formed, which in the normal  course would be divided 50/50 on divorce) after accepting the husband’s evidence that she had “married him to secure financial wealth for herself, advance herself in [the] political arena by using his influence and to benefit from his estate.”

    Relevant factors considered by the Court – the short duration of the marriage (14 months from marriage to separation), the 39-year age gap between them, her lack of love or respect for him and embarrassment at being seen in public with him, and her desire to live an extravagant lifestyle beyond his means.

  3. A husband’s substantial misconduct costs him his share of a joint estate 
    In this matter the Court ordered the husband to forfeit his share of another “in community of property” joint estate, including an immovable property and a share in his wife’s pension interest. The husband’s conduct, held the Court, had been tantamount to “substantial misconduct”, including failure to contribute to household expenses, failure to pay his child’s maintenance until forced to do so by the Maintenance Court, extra-marital affairs and physical, financial and emotional abuse.

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 your professional adviser for specific and detailed advice.

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Maintenance Claims and Life Partners

Maintenance Claims and Life Partners

More and more couples are opting to live together as permanent life partners rather than enter into a formal marriage. The risk for such couples is that whilst our law is steadily (if slowly and cautiously) extending many of the protections of formal marriage to unmarried life partners, that process is not by any means complete yet.

A recent High Court decision, refusing a life partner’s claim for interim maintenance after her relationship broke down, illustrates.

A “permanent romantic relationship” and a failed maintenance claim
  • An opposite-sex couple had lived together in a “romantic” relationship for 8 or 9 years, having three young children and splitting when one partner left the common home.
  • That partner then sued her ex-partner for (amongst other things) personal maintenance for herself for ten years or until her “death or remarriage”. She based that claim on her request for a declaration that she and her partner had lived as “partners in a permanent opposite-sex life-partnership in which the partners had undertaken reciprocal duties of support”. That main action is being defended by the ex-partner and is yet to come to trial.
  • In the meantime, having successfully obtained interim maintenance orders for her children, she then asked the High Court to likewise order interim maintenance for herself as well. She asked for R56,000 per month plus payment of medical, motor and other expenses, together with a R1m initial contribution to costs.
  • The Court dismissed this interim application, and whilst its analysis of our current law on the subject, with all the constitutional law ramifications, will be of great use and interest to lawyers, the practical result is what life partners should take note of.
What you must prove to get a maintenance order

Holding that “a ‘permanent romantic relationship’ is not synonymous with a permanent life partnership wherein the parties undertook reciprocal duties of support to one another within the context of a familial setting”, the Court found that the applicant “must first prove facts establishing that the duty of support existed, and that it existed in a familial setting.” (Emphasis added)

She could prove all that, said the Court, in the pending court case. For the moment she must live on her own means, without interim maintenance, until her main action comes to trial.

Practically, if you find yourself in a similar situation you have four choices if you want to claim personal maintenance for yourself (note that maintenance for children is an entirely separate issue, not subject to these limitations) –

  1. As regards interim maintenance, you can hope that a court will assist you despite the outcome in this case, the Court here stating that “In reaching these conclusions we make it clear that they pertain only to the particular case presented to us by the applicant. Our conclusions are most certainly not intended to be of some broader implication or consequence. It thus of course remains open to anyone to approach court for declaratory relief of the nature which the applicant has sought in this matter and it is hoped that, should that occur, this judgment may provide assistance as to the manner in which such an approach should be made.”; or
  2. You can try to prove at the full trial that your relationship was more than a “permanent romantic relationship” and was in fact a permanent life partnership with an undertaking of mutual support; or
  3. You can hope for a change in the law creating an automatic duty of support between you. New legislation on the matter has been pending for many years but appears to be currently stalled. In addition, if this particular case proceeds to trial it may be that something further will emerge from that; or
  4. Clearly the safest solution – you can put the matter beyond all doubt by signing a full “cohabitation agreement” as soon as your relationship becomes a permanent one.
What should be in your cohabitation agreement?

Although everyone’s own situation and needs will be unique, make sure that your cohabitation agreement (also sometimes called a “domestic partnership agreement”) sets out clearly your respective legal rights and financial arrangements both during your relationship and in the event of separation.

Cover questions such as –

  • How will your various assets be divided?
  • Do you undertake a reciprocal duty of support and on separation will each or both of you be entitled to personal maintenance and other financial support?
  • What provisions are made for your children’s support and maintenance?
  • Will there be any financial adjustment between you? What happens for example if only one of you works? Or if you paid for an extension to your life partner’s house or have been paying the bond? Or if one of you brought more into the relationship than the other?
  • Who will take over ongoing liabilities and contracts such as leases, bonds, medical and life policies, monthly accounts and so on?
  • What else that will need to be regulated in your particular circumstances?
Also make wills!

Supplement your cohabitation agreement with a valid will (“Last Will and Testament”) or perhaps a joint will. That’s the document that will count when you die and it’s the only safe way of ensuring that your last wishes are carried out, and that the loved ones you leave behind are properly looked after once you’re gone. Your cohabitation agreement and your wills are separate and essential documents, so have your lawyer draw them all for you at the same time.

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 your professional adviser for specific and detailed advice.

© LawDotNews

Divorce: Remember to Review Your Will!

Divorce: Remember to Review Your Will!

“It has long been a foundational principle of our common law and the legislation that has governed the law of testamentary succession that a will, properly executed, is the document that authoritatively reflects the genuine and voluntary dispositions of a testatrix.” (Extract from judgment below)

Most people when making wills and estate plans will lean toward leaving all or most of their estate to a spouse in one form or another.

But if things fall apart and divorce looms it is easy in all the stress and hurly burly of the break-up to forget all about your will. Now it may be that you are quite happy to leave things as they are, but it’s far more likely you will want to make changes – big changes.

Either way, it is important to have on your break-up To Do list a big note “Review and change my will”. If you don’t, our law makes your decisions for you – better than nothing perhaps but far from ideal.

The risks of leaving your will unchanged

In terms of our Wills Act, your ex-spouse is excluded from inheriting under your pre-divorce will for a period of 3 months, unless (a very unlikely scenario) your will makes it clear that you wanted your ex-spouse still to benefit despite the divorce.

After 3 months, if you haven’t made a new will your ex-spouse can inherit again because you are assumed to have wanted him/her to remain an heir. In practical terms, you have 3 months to get your act together and make a new will reflecting your new wishes.

But rather than do nothing for 3 months, leave nothing to chance and make your new will as soon as you can. If you do nothing, your preferred heirs (your children perhaps, or other loved ones) are at risk –

  • If you die within the 3-month period, your family could find itself in a bitter fight over your will and how you intended your estate to be distributed. Witness the Supreme Court of Appeal (SCA) case we discuss below.
  • If you survive beyond the 3 months, you may have just left everything by mistake to an ex-spouse from whom you are totally estranged.
A case in point
  • Shortly before her marriage a wife made a will leaving everything to her husband. She failed to revoke or amend that will after their divorce and committed suicide within the 3-month period.
  • Excluded by the Wills Act from inheriting (as set out above) the ex-husband applied to the High Court to have that provision of the Act declared unconstitutional. The High Court ruled against him and he appealed to the SCA.
  • The SCA upheld the constitutional validity of the Wills Act provision, and whilst the Court’s detailed reasoning for reaching that conclusion will be of great interest to lawyers, from a lay point of view what really counts is –
    • The two risk factors set out above remain in place
    • The case serves as a clear warning that not reviewing your will on divorce can easily lead to protracted and bitter litigation, to everyone’s detriment.

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 your professional adviser for specific and detailed advice.

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