Financial Guide for Living Together
This blog will examine how living together can affect your finances.
When moving in with a partner, it is vital to research how this will affect your finances. Although it might not be the most romantic way to kick things off, having a conversation about how things will be organised in the event things don’t work out is crucial. For more information and tailored reliable advice, give us a call on 0141 611 1191.
How Do You Become Cohabitants?
Establishing a cohabitation relationship has no formal process of registration or solemnisation. However, it is a recognised adult relationship under Scots law. The Family Law (Scotland) Act 2006 outlined how a couple acquires the status of cohabitees. This includes:
· Living together as if married
· The length of cohabitation
· The nature of the couple’s relationship
· The type and extent of shared financial arrangements
In short, there are no black and white rules as to what relationships constitute cohabitation, and Courts will consider the specifics of each individual relationship.
What Rights do I Gain as a Cohabitant?
In Scotland, cohabiting couples are recognised by the Courts and as such gain a few more rights than residents in other parts of the UK. There are two key rights to consider:
Assumption of Common Ownership of Household Goods
During a non-cohabitant breakup, there is no assumption of shared ownership due to the relationship status, regardless of how things were bought and paid for. As cohabitants, however, the Court will start with the presumption that household goods are jointly shared.
Financial Provision on Breakdown or Death
If cohabitation can be established, financial provision may be applied following the breakdown of the relationship. However, unlike with the equivalent legislation for traditional marriage, this is not a precise economic calculation. Instead, the Courts work towards the general goal of a ‘fair’ outcome. This is a very muddled area of Scots Family Law which can lead to uncertainty.
In the unfortunate event of the death of a cohabitant, the other may have an automatic right to their estate even if no will exists. This is unique to Scotland in terms of the UK.
What is a Cohabitation Agreement?
A cohabitation agreement is a legal document which can outline how you and your partner will pay bills and settle expenses while living together. Similarly, you can outline how you plan to split property, household goods, personal belongings, debts and savings. Furthermore, financial provision for any children involved can also be outlined.
Provided that each party to a cohabitation agreement has received independent legal advice from a qualified solicitor, the document is legally binding. This means the Courts can enforce its contents in the event one party does not comply.
These documents should be signed, dated, and updated whenever there is a significant change to the relationship. This could include the purchase of a new property or the birth/adoption of a child.
Although it might seem like an awkward discussion to have, having an agreement in place can offer peace of mind and promote trust. This allows both parties to focus on the relationship without worrying about potential future disagreement.
At Kee Solicitors, we can draft a cohabitation agreement between you and your partner and update it as necessary. Speak to one of our solicitors today to find out more.
Should I Open a Joint Account when Cohabiting?
Joint accounts aren’t restricted to married couples. In fact, they can make managing shared finances incredibly simple. Bills and expenses can be settled from the shared pot, meaning you don’t have to worry about someone paying far more or less than their fair share.
However, a joint account can have negative repercussions you should consider. For example, if your partner defaults on payments or is irresponsible with money in general this can affect your credit score both while in the relationship and thereafter.
Property Rights for Cohabitants
If you rent a property with your partner and are both tenants on the lease, you are equally responsible for paying rent in the event of a split. Having been in a relationship does not necessarily affect this, unless you have organised a cohabiting agreement.
If you own a property, things can be a bit more complex. There may be circumstances where if you are joint owners and one owner dies, the ownership can be transferred to the other partner even in the absence of a will. However, this needs to be considered on a case by case basis, so make sure you seek reliable legal advice to protect your rights.
Get in Touch
Are you looking to set up a cohabitation agreement or just need tailored advice on your situation and rights? Kee Solicitors can help you establish exactly where you stand and offer guidance on what arrangements need to be made to protect your interests.