More than ever before, couples in Scotland are choosing to live together rather than marry. According to the Office for National Statistics, the number of families that include a couple in a legally registered partnership in the UK has increased by 3.7% in the past decade, to 12.7 million. By comparison, the number of cohabiting couple families saw an increase of 22.9% over the same period, to 3.6 million.

Most people who get married are quite clear that marriage constitutes a legal contract and certain automatic rights and responsibilities derive from that contract. For example, spouses have an obligation to support each other financially, both during the marriage and post-separation. This is known as aliment. They also have the right, upon separation, to share in the value of pensions accumulated during the marriage and to have property transferred to them. If a marriage breaks down then, in order to formally bring it to an end, the couple need to divorce.

If a couple want to protect certain assets from being taken into account in any future separation, it is perfectly possible to do that and family lawyers like me would actively encourage it. Couples can enter into a prenuptial agreement (before marriage) or a postnuptial agreement (during marriage) and so long as these have been entered into by both parties willingly, and on the basis of having received independent legal advice, they are legally valid contracts which are enforceable.

However, people are far less aware as to the consequences which derive from cohabitation, with many surprised to find that their former partner, with whom they have never entered into any contract, is entitled to make a financial claim against them within a year of them having separated.

The law in relation to cohabitation is currently set out in the Family Law (Scotland) Act 2006 and gives cohabitants various limited rights. In order to make a financial claim, the cohabitant must prove that they have suffered economic disadvantage as a result of the relationship (either in the interests of their former cohabitant or their child) or that the other has been economically advantaged as a result of the cohabitation. The court must consider the extent to which any economic advantage is offset by the economic disadvantages suffered by the cohabitant during the relationship, and vice versa. If, for example, one party has benefitted financially from the relationship, but has required to give up their employment in order to care for a child of the relationship (or any child accepted as a child of the family), this may well offset any economic advantage. In the event that a cohabiting relationship breaks down, there is no formal process involved in bringing it to an end – it is simply over.

Scottish cohabitation law has been criticised as being out of date, unclear and overly complicated. The law is currently in the process of review with the Scottish Law Commission (SLC) and a draft Bill has been prepared. If the law relating to cohabitation changes, giving separating cohabitants even more options to make a claim upon the other party than they have at present, then it will be more important than ever to protect assets, either before living together, or as soon as possible thereafter.

People living in a cohabiting relationship can take steps, at any time, to protect their assets in the event of a future separation. Family law solicitors can prepare agreements which are signed by both parties. A bit like prenuptial and post nuptial agreements, these cohabitation agreements provide certainty by detailing what is to happen to various assets in the event of a separation. Cohabitation agreements are flexible documents that can be as complex or straightforward as the relationship. They can regulate contributions to the property from savings or contributions to various aspects of household expenditure.

There are fewer situations more stressful than the breakdown of a relationship. The separation of finances, homes and care arrangements for children all require to be dealt with. This is difficult at any time but can be especially so during a period when the cost of living in the UK is the highest it has been for 40 years. Soaring energy prices, high fuel costs and economic uncertainty can cause strain on relationships and may also result in complexity in dealing with finances upon separation.

Prenuptial, postnuptial and cohabitation agreements may, to many, seem unromantic. However, having an agreement in place to regulate how financial matters will be dealt with upon separation, could save many thousands of pounds in legal fees in the future. Life is full of uncertainty, and while it is impossible to account for every eventuality, planning for your family's financial future this way may save money and emotional strife in the long-term.

This article first appeared in the Press and Journal.


Sarah Lilley