Financial planning is vital for all committed couples regardless of their marital status, according to Queen Malobane, Provincial General Manager, Metropolitan.
"Many couples assume that living together without marriage means avoiding complex financial ties, but the reality is that cohabiting partners need just as much financial planning as married couples – if not more," Malobane said.
Life cover and estate planning
For long-term couples, a shared life usually means shared expenses including rent and groceries as well as bigger financial commitments and investments.
However, if there is not any formal protection, one partner could be left financially vulnerable if the other partner dies unexpectedly. Life cover is an option to protect the surviving partner and can make sure that they are not left financially stranded.
Unmarried partners do not have legal inheritance protection, therefore designating your partner as a life cover beneficiary is important to ensure they are provided for in the event of death.
It is vital to have a clear estate plan, particularly in South Africa, as unmarried partners do not have automatic inheritance rights.
"A will allows you to specify asset distribution, ensuring your partner benefits rather than distant family members. Regularly updating your life cover and estate plan with an adviser will help keep your assets aligned with your evolving needs and protect your loved ones," Malobane said.
Children as beneficiaries
Couples that are not married who have started a family should make sure that their financial arrangements and legal documents protect their children, should anything happen to either parent.
“Establishing a testamentary trust in a will allows assets to be managed for children until they reach a certain age, shielding the inheritance from any complications that might arise," Malobane said.
"Equally important is keeping wills up to date and ensuring beneficiaries are regularly reviewed to reflect any changes in family dynamics or financial goals."
Unmarried and building wealth
Partners who are cohabiting partners often build wealth together, through property, savings, or investments.
Not having a formal arrangement in place can result in these assets becoming difficult to divide, should the relationship end.
It is advised that unmarried couples should consider a cohabitation agreement that clarifies ownership as well as protects both parties' interests, to avoid conflict down the road.
"Unmarried partners should also consider joint investments or savings accounts, but with clear terms on ownership and access. Without marriage laws to regulate how assets are split, formalising arrangements in writing is even more important," Malobane said.
Get advice from a financial planner
While financial planning for unmarried couples may seem difficult, working with a financial adviser can make the process easier.
A financial adviser can guide you through:
- choosing life cover
- structuring your estate plan
- formalising agreements.
Without automatic protection, advisers can help make sure assets are shared according to your wishes, establishing financial security for both partners.
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