THE recent case of Gow v Grant in the Supreme court seemingly rubber-stamped Scottish laws giving non-married cohabiting couples more claim on each other’s financial assets in the event of separation.
As always, it’s better to consider what should happen with the division of assets in the event of a split rather than face expensive litigation. Cath Karlin, partner and accredited specialist in family and child law at bto solicitors, shares her tips on protecting your financial assets if things don’t work out.
1 Think ahead
Before you decide to cohabit, think about how you will untangle your affairs if the relationship doesn’t work out. Section 28 of the Family Law (Scotland) Act 2006 provides couples who cohabit with rights against the other in the event of separation or death.
2 Put it in writing
If your partner is moving in to your property, make sure that you have a clear written agreement in relation to who is paying for what. Try not to let your partner spend money on home improvements without a clear written agreement as to how they will be reimbursed if you separate. If you do not, you could end up with your partner making a claim against you in court.
3 Moving in
If you decide to buy a property together, try to pay identical deposits, take title in joint names and pay equal amounts to the mortgage. If that is not possible, you should enter into a cohabitation agreement which will detail your respective deposits.
Make sure that there is an opportunity for one of you to buy the other out in the event of separation. If you are paying disproportionate amounts of the mortgage, document that and record how this imbalance will be refunded, if at all, on separation.
4 Not the marrying kind?
If you have no intention of marrying and intend to cohabit long term, think about pension provision. Don’t assume that you will automatically receive your partner’s pension on death. Make provision individually for pensions.
5 Where there’s a will…
If you do not make a will, your partner would have to make a claim through the courts to secure a portion of your estate. This is expensive and can be traumatic. Your partner could potentially be thrown out of their home by your family after your death.
Discuss what you want to happen on death with your partner and your family. Make mirror wills. If you want your partner to remain in the house for example, document this both in your wills and in the title deeds.
6 Think about the kids
Conversely, you may not want your partner to inherit your estate. If you are cohabiting relatively late in life, you could ring fence your assets so that they will be inherited by your children for example.
If you do not make a will, your partner could end up with the majority of the assets, leaving your children with nothing. If you have been married and have not entered into a separation agreement or divorced, your estate could potentially be exhausted by your estranged spouse and your partner both making claims.
7 Know your rights
Don’t assume that on separation you will end up with half of the assets. The rights of cohabitants are very different to those of married couples even if you have children together. You may end up with nothing or very little.
Try to have a frank discussion with your partner around these issues and think about entering into an agreement in the event of separation, and wills in the event of death.
8 Equal parents
Similarly, don’t assume that just because you are unmarried, the mother has the full gamut of parental rights and responsibilities over the children. Since 2006, as long as a father is named on a child’s birth certificate, he has the same rights as the mother even if they do not live together.
9 Joint assets
Bear in mind that household goods are deemed to be jointly owned even if they are bought individually.
10 No maintenance
Unlike spouses, there is no right of continuing support against the other. Don’t take for granted that you will be looked after financially post separation.
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