Despite an increase in couples deciding not to tie the knot, the law protecting non-married couples does not does not reflect the rising number of more non-traditional relationships, nor does it offer the same level of protection which is afforded to married couples.
From a financial point of view, on the separation of a married couple all of the finances will be considered including all capital assets, income, liabilities and pensions.
When it comes to dividing the assets, a Court will consider three main principle: firstly, what are the needs of both the parties, and how can these needs be met? Secondly, how can the assets be shared between the parties, and is the division fair, taking into account needs and equality? And lastly, have there been any significant contributions that need to be taken into account, the source and nature of which might suggest a depart from equality?
It is clear that the Court does not want to leave either party without the means to provide for themselves or their family. Additional factors will also be considered to inform a Court’s decision, including the standard of living enjoyed by the parties during the marriage, and any financial needs that one party may have in respect of any children in their care. The approach is very holistic, and it is clear that the principles of needs, sharing in particular are paramount.
Indeed, the principles are so strongly bound up in division of assets for a married couple that the Courts have the discretion to override a pre-nuptial agreement should the terms be unduly unfair. Although the legality of pre-nuptial agreements lie beyond the scope of this comment, it demonstrates that the need for fairness is overriding.
The same principles are not applied when it comes to the separation of non-married partners. The division of assets will be treated much more discretely: joint accounts will usually be split equally, and personal assets and savings retained by the parties. The principles of need, sharing and contributions will not be considered, which can leave one party in a very difficult financial position upon separation.
The greatest difficulty faced by non-married couples is often how the family home will be dealt with on separation.
If a property is jointly owned by non-married partners who are separating, it is presumed to be owned in equal shares, unless there is any evidence to the contrary. Such evidence may include a declaration of trust, a cohabitation agreement, discussions between the parties in relation to the prospective ownership of the property, or the creation of an implied trust.
Where a house is owned in the sole name of one of the parties, the other person will have to prove the existence of a trust to establish a beneficial interest in the property.
This can be done by proving they have made a significant financial investment (for example, to the purchase price of the property, the mortgage or on significant building work that may increase the value of the property), and other general factors, such as helping to choose the property and discussing future planning arrangements, or being given the impression that they would have a financial interest in the property.
All of these factors will be case specific, and in some circumstances may be difficult to prove. What is clear though is that co-habiting couples do not have access to the same legal remedies as married couples, and until such a time as the law reflects the change in non-traditional partnerships, for co-habiting couples “prevention is better than a cure”.
If a co-habiting individual wishes to protect their financial position on separation, it is vital to put that protection in place before separation, as they may find they are not entitled to the relief they first thought. This can be done by way of a cohabitation agreement (or a declaration of trust in respect of a property). A separation agreement can be drawn up to detail the terms of the separation to include the sharing of solely- or jointly-owned assets and the payment of maintenance.