Navigating separation: Unmarried couples

The challenging process of separation for a couple

Separation is a difficult process for any couple, but for couples that are not married it can be extremely challenging. This is because they do not have the same automatic rights and protections as married couples, when dividing financial assets such as property division. A main difference is unmarried couples cannot claim assets against individual names and only against those in joint names. This can have financial consequences to a party whose name is not on substantial assets, most commonly the family home.

Property, Assets and Liabilities:

Where both parties are named on the title deeds, they share ownership of the property. Parties can hold a property as Joint Tenants or Tenants in Common.

If the parties own the property as Joint Tenants, they have equal rights and interests. On the death of one party in a joint tenancy, their share automatically transfers to the surviving party.

If the parties hold the property as Tenants in Common, the ownership may be split in equal or in unequal percentages. Unlike Joint Tenants, upon the death of one party their share does not automatically transfer to the co-owner but by way of their will or via the intestacy rules.

Once ownership is established, the parties may agree for the property to be sold and divide the equity according to the structure of ownership. Alternatively, if one party wishes to remain in the property, they might be able to buy out the other party’s share, or a charge may be placed on the property to ensure that the other party’s equity is protected and released in the order of a sale. If the parties cannot agree on a final settlement, one party may need to apply for a court order to force the sale.

Where the family home is owned solely by one party, the sole owner retains all legal and beneficial ownership of the property. Therefore, the party who doesn’t own it does not have a right or claim to the property. However, a beneficial interest may arise if one party can show that they have acted to their financial detriment and in doing so, it created a common intention between the parties that a beneficial interest in the property would arise.

In cases that mirror these circumstances, a constructive trust may come into effect. Constructive trusts arise when there isn’t a formal agreement or contract regarding property ownership, but it would be unjust for one person to deny another person a share based on their contributions, such as contributing to the mortgage or the purchase price of your property.

Other assets held in the joint names of the parties, such as savings, can be considered when reaching financial agreements. However, solely owned pensions cannot fall part of any potential claim.

For liabilities in joint names, both parties are equally responsible for settling these and liability for both parties continues up until one party takes on the entire responsibility or a new agreement is made.

Children:

There are provisions under Schedule 1 of the Children Act 1989, which enable a financially weaker party of an unmarried couple to make an application on behalf of a child. The act enables the court to make a variety of financial orders including; a periodical payments order, a lump sum order, a settlement of property order and a transfer of property order. The claim can only be in regard to the needs of the child and/or for the benefit of the child.

Cohabitation Agreement:

For unmarried couples, a cohabitation agreement can be a wise decision to put in place. These agreements outline the rights and responsibilities of each partner in the event of a breakdown of the relationship, often providing clarity to issues like property division, financial arrangements, inheritance rights and even child arrangements.

While a cohabitation agreement is not automatically enforceable, the terms within the agreement can hold significant weight. In legal proceedings as the court may consider it to be strong evidence of the parties’ intentions if a dispute arises.

Reviewing Wills and Legal Documents:

During separation, it is also important to review your wills and lasting power of attorney documentation. This ensures that your wishes are reflected, especially when significant circumstances have changed.

If you need any support, assistance or advice during this process, please do not hesitate to get in contact.