FINANCIAL ISSUES ON RELATIONSHIP BREAKDOWN

A few years ago, the breakdown of a relationship was synonymous with the end of a marriage, and legal advice was required primarily in connection with divorce proceedings. The situation today is very different. Many, if not most, heterosexual couples live together either before or instead of marriage. Ironically, it may be same sex couples who lead the way back towards the traditional concept of marriage, by entering into it’s equivalent of civil partnership.

As the changes in society have occurred over a relatively short period, certain aspects of the law have evolved at a slower pace, as a result of which the rights and responsibilities which arise on relationship breakdown can differ dramatically, depending on a myriad of circumstances.

The married couple

The most notable change was brought about by the House of Lords decision in the case of Mr and Mrs White, which precipitated the move towards the equal division of substantial assets built up during the course of a long marriage. The court must take into account numerous factors, and will depart from equality only if there is good reason, such as the need to provide accommodation for the children, to redress a significant imbalance in income, or if assets were acquired by one party before a relatively short marriage. Conduct is not relevant unless extreme.

The case of Mr and Mrs Miller caused some controversy. After a childless marriage of only 2 ¾ years, Mrs Miller was awarded a lump sum of £5,000,000 (not much less than 25% of the capital), despite the fact that the vast majority of the wealth had been generated by investments made by Mr Miller before he married his wife. The Court decided that Mrs Miller was entitled to an equal share of the enormous increase in the value of the investments during the relationship.  It is likely that the outcome would have been different had Mr & Mrs Miller entered into a pre-nuptial agreement.

Unmarried co-habitants

Many people believe that those who live together acquire rights under a “common law marriage”. They do not.  The common law wife is a myth.  In reality, rights of a co-habitee are few and far between.  Whilst this often leads to injustice, one advantage is that co-habitants are not constrained by the law, and can dictate their own terms for the relationship by entering into a Co-habitation Agreement. 

Most disputes concern the family home. There are two ways in which a house can be purchased in joint names – as joint tenants in equal shares or as tenants in common in whatever amount is specified. Courts are prepared to determine what the shares should be only in the absence of a clear declaration in the Conveyance/Transfer, but will not vary interests which are clearly stated. 

If a house is in the sole name of just one of the couple the other has no financial interest unless he or she has made a financial contribution towards it’s purchase (for example, by providing some of the deposit or paying towards the mortgage); or it is understood that both are entitled to a share & the person whose name isn’t on the title has relied on that understanding to his or her detriment. This can be very difficult to prove.

It is therefore essential that clear advice is given to couples wishing to buy or move into a house together, and that their intentions be made clear at the outset, ideally in a Co-habitation Agreement.

Obviously, child support must be paid where there are children. In addition, the Children Act provides the court with power to award a lump sum for the children’s benefit, if there is a need and the parent has the means to pay, and can order that the parent with care of the children be permitted to remain in a house for so long as the children are dependant.

Same sex relationships

Those who live together, without formalising their relationship, are subject to the same legal vagaries as the unmarried co-habitant.

However, the Civil Partnership Act became effective on 5th December 2005, as a result of which same-sex couples can elect to go through a procedure for the signing of a civil partnership document, registering them as partners with the same validity as marriage, including the right to apply to the Court for financial provision if the relationship breaks down and the partnership is dissolved, as with divorce.  It is likely that the period of co-habitation will be equated with the length of marriage when the court considers whether it’s dealing with a short or long relationship, and that this will affect the outcome. Those planning to register should therefore seek specialist legal advice, and carefully weigh up the advantages and drawbacks of registration before taking the plunge. Consideration should be given to entering into a pre-registration agreement (similar to a pre-nuptial agreement) in order to preserve the parties respective financial independence. 

Carol Maher is a solicitor, & partner in the firm Irene Chenery Maher & co at 21 Church Street Clitheroe Tel 01200 422264. She is a mediator & member of the Law Society & Resolution specialist family law panels

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