In this article, we intend to look at the arrangements between cohabiting couples who have or are in the process of separating. Cohabiting couples are couples who are neither married nor in a civil partnership. In other words, there is no legal basis for the relationship other than they are living together and may have been for some considerable time. Whilst there is no legal basis for the relationship, the law in Scotland sets our how assets and debts can be dealt with on separation.
How do cohabiting couples build up assets and liabilities?
Over time, couples acquire assets and incur debts. These can be very wide-ranging from something as simple as personal belongings to something as big as a house. Some things may have been purchased by one party whilst other things may have been bought by the other. If a house is involved, we have to consider whether the title is in the name of one or other of the parties or if it is held in joint names.
You also have to consider how debts have been built up and whether these debts belong to the individual or whether they are joint debts
Over time, the employment or business status of each or both of the parties is likely to have changed.
All of these matters need to be taken into consideration when the cohabiting partners separate.
How are assets and liabilities dealt with on separation?
The most basic proposition is that assets and liabilities should be divided equally between the parties. This may sound very simple and straight forward, but the reality is usually very different.
Section 28 of the Family Law (Scotland) Act 2006 looks at financial provision on separation. This clause contains a framework for a fair division of assets. When you review this clause you will appreciate that the division of assets may not be equal.
Beware of the one-year rule
We think it is important to point out that if formerly cohabiting couples cannot agree to the division of assets, one party will have to raise proceedings against the other within one year of the separation.
Also, if the parties have agreed to mediation to resolve the financial provision and they have failed to reach an agreement, the time allowed to raise proceeding is 8 weeks after the mediation has failed.
What happens if you go to court?
If you are seeking an uneven share of the property, you have to justify your entitlement to it. You need to show that the other party has gained an economic advantage from your contribution from the relationship. Alternatively, you may have to show that you have been economically disadvantaged in the relationship. This might be because of the other party or a child of the relationship.
The sheriff will listen to the evidence presented by both parties and decide on the extent of the division. There are no hard and fast rules.
If you would like to know how the courts are likely to deal with division of assets, you should read the Supreme Court case of Gow v Grant from 2012. You might also consider the Sheriff Appeal Court case of Duthie v Findlay which explains what can and cannot be taken into account.
What is the best way to resolve the financial provisions?
Our view and experience is that it is always best to resolve issues relating to financial provision through negotiation. It tends to be more effective and quicker than trying to resolve matters through court. We are not saying that it is any easier but may be a better way of resolving the financial issues between parties. Perhaps you should consider court as a last resort rather than the first option.
We deal with a wide range of Family Law cases and advise many clients on Separation Agreements, court proceedings and their options on separation and divorce. If you are thinking about separating and would like some advice, please contact us.
