Scotland is alone in the UK in providing a legal framework setting out the rights of cohabitants to make a financial claim on cessation of cohabitation by reason of separation or death.
Yet the law remains confused and it is often difficult for solicitors to give clear guidance to clients on the level of any potential claim.
The rules about the financial consequences of cohabitation introduced the following rights:
rights in certain property;
the right to apply for financial provision when a relationship breaks down;
the right to apply for financial provision when one of the cohabitants dies.
It is important to appreciate from the outset that unmarried couples living together do not have the same rights as married couples and civil partners. The Act provides a set of basic rights to cohabitants, but recent court decisions have shown that these rights still fall well short of those enjoyed by married couples.
What is a cohabitant?
A cohabitant is a member of a couple who live or lived together as if they are or were husband and wife, or two persons of the same sex who live or were living together as if they are or were civil partners. To determine whether two people are cohabitants, the court must consider the following:
the length of period during which the two people were living together;
the nature of the relationship during that period; the nature and extent of any financial arrangements during that period the two people have been living together or lived together.
The law does not set down a minimum period of cohabitation before a claim can be made under the Act.
1. Rights in certain property
It is presumed that each cohabitant has the right to an equal share in any household goods acquired during the period of cohabitation.
There is also a right to an equal share in (1) the money derived from an allowance made by one or other of the cohabitants for household expenses, and/or (2) any property bought out of that derived money. It should be noted that this does not apply to the house that the couple live in.
2. The right to apply for financial provision when a relationship breaks down
Cohabitants have the right to apply to the court for financial provision on the breakdown of the cohabitation.
The court can make the following limited orders:
(a) an order for the payment of a capital sum;
(b) an order to pay money in respect of any economic burden of caring, after the end of the cohabitation, for a child (a person under 16) of the cohabitants;
(c) any interim order that the court thinks is appropriate.
In considering whether to make any of these orders, the court must consider whether (and to what extent) one cohabitant has gained any economic advantage from contributions made by the cohabitant making the application for financial provision. The court must also consider whether (and to what extent) the cohabitant making the application has suffered economic disadvantage in the interests of the other cohabitant, or a relevant child. A relevant child can be a child of the cohabitants or a child accepted as a child of the family. The law in this area is evolving and you should consult a member of the Family Law Association to discuss how it might affect you.
3. The right to apply for financial provision when one of the cohabitants dies
If one cohabitant dies intestate (without making a will), the surviving cohabitant has a right to apply to the court for an award from the deceased cohabitant’s estate. It should be noted that if the deceased spouse had a will, but a portion of the estate was not disposed of by the will, that portion can be subject to a claim.
The award can comprise payment of a sum of money or transfer of property (including heritable property such as the home). The award cannot exceed the amount the cohabitant would have been entitled to if he or she had been married to the deceased cohabitant. The court must take account of certain factors when deciding whether to make an award. These include the size of the deceased cohabitant’s estate, any other benefits the surviving cohabitant will receive, and any other claims against the estate.
There are very strict time limits for making applications to the court (in respect of both breakdown of the relationship and death of one cohabitant).
If the claim is being made because the cohabitation has broken down, the application must be made within one year from the date of breakdown. If the claim is being made after the death of one of the cohabitants, the time limit is six months from the date of death. Therefore, if you think you may have a claim, you should seek advice from a family law solicitor as soon as possible.
The rules relating to financial aspects arising on divorce or termination of a civil partnership are very different to those relating to cohabitation. Most, if not all, people know that there are financial implications in marrying. Not everyone is aware that there are financial implications of cohabiting. While the financial implications of cohabitation are limited in comparison to the financial implications of marriage, some people choose not to marry because they do not want there to be any financial implications of being in a relationship.
You may wish to take legal advice before moving in with your partner.. A cohabitation agreement could be drafted to set out the arrangements which will come into play if and when a cohabiting couple separate. This may minimise any potential stress and anxiety. A cohabitation agreement can allow parties to have control over the consequences of cohabiting with someone, and/or the consequences of termination of a cohabiting relationship.
A cohabitation agreement is no different to any other contract and can cover as much or as little as possible, depending on the individual circumstances of the couple.
As explained above, a cohabitant can make a claim on the deceased cohabitant’s estate on intestacy (where there is no will). There is no substitute for a will. If a will is well drafted and covers all of the estate, then no application can be made by a cohabitant. This is important to some individuals. For example, when individuals are in second relationships, it is often important that the estate is protected so that children from previous relationships are the only or main beneficiaries of the estate.