Cohabiting couples – financial provision on separation

Cohabiting couples in Scotland are people who live together as a couple but who are neither married nor in a Civil Partnership. Whilst there is no legal basis for the relationship, Scots Law caters for financial provision on separation.

How are assets and liabilities built up?

It’s likely that the cohabiting couple will have built up assets and liabilities over the years. When they look back, they’re likely to discover that they haven’t contributed to these jointly. One party may have bought one thing, the other party may have bought something else. They may have bought some things jointly. If they have purchased a house, this might be in the name of one party or in joint names. The parties employment situation may have changed over the course of the relationship and either or both of them may have taken out loans.

If the parties separate, just as in any family separation, this has all to be sorted out.

How are assets and liabilities split on separation?

The most basic proposition is that assets and liabilities should be divided equally. Perhaps, that’s where the trouble starts.

Section 28 of the Family Law (Scotland) Act 2006 caters for financial provision on separation. It sets up the framework for a fair division of assets. That division may not be an even split.

The one-year rule

If formerly cohabiting couples can’t reach agreement, one of the parties can raise court proceedings against the other. That action must be raised within one year from the date the parties ceased to cohabit. If the parties have tried mediation to resolve the financial provision and it hasn’t worked, then the time allowed to claim is 8 weeks after the mediation broke down.

What do the courts take into account?

When one party is seeking an uneven division of the property, they have to justify certain things. For instance, they have to show how the other party had gained economic advantage from their contribution. They also may who that they have been economically disadvantaged in the interests of the other party or any child.

There are no hard and fast rules and a sheriff will decide on the division of assets after hearing arguments from the parties.

The leading case in this area is the Supreme Court case of Gow v Grant from 2012. You can read that case here. The recent Sheriff Appeal Court case of Duthie v Findlay is another example that explains what can and can’t be taken into account. You can view that case by clicking here.

How are these things best resolved?

Our experience is that it’s best to resolve issues of financial provision through negotiation rather than court. It’s not always easy for cohabiting couples to resolve their financial issues between them.  However, they should view court as a last resort rather than their first option.

If you need help with a separation agreement, please get in touch.

If you’d like to know more about family law matters, please click here.