Despite what it may feel like when you are going through a divorce, there is life after separation. People often do find someone else when they are ready to do so – or even when they are least expecting it.
Many people who have been through divorce deliberately choose to cohabit rather than remarry, in the hope of protecting their financial position and avoiding the same battle again. But is it as straightforward as that?
Your legal position if you live with a partner is very different from that if you are married. There are advantages and disadvantages to either legal status, depending on your priorities. You need to understand the implications, and potential pitfalls of each option, so you do not fall unwittingly into any traps.
One of the key differences is that you do not have the same financial claims against your partner you would have if you were married. This is why people often think it is better to remain unmarried if they want to protect their wealth, in the hope that it will cost them less in the long run.
However, even if you owned the property before you met your partner and it remains legally owned in your sole name, there are circumstances in which your partner can potentially claim a share in its value after he or she has moved in. For example, if he or she has contributed towards the mortgage repayments and/or carried out significant work to the property, and can point to conversations you have (or haven’t had) throughout your relationship, there is a potential argument that the property is held on trust for you both because either there was a joint intention that your partner would have a share of the property or you promised as such and that your partner acted to their detriment accordingly. You may of course deny the claims, but it then comes down to evidence from each of you, which is not always clear cut and you have the stress of trying to prove your case.
Disputes over property arise when people do not talk about these issues or think about what might happen if the relationship breaks down. It is only at that point when it becomes clear that you are saying different things about who owns what.
The best way to avoid these arguments, which can be both emotionally and financially draining, is to ensure you have the discussion and agree the position at the outset and, crucially, that you record it in writing. This can be by way of a cohabitation agreement, a deed of waiver (confirming your partner has no interest in your property) or a declaration of trust if it is agreed that the property is owned jointly but in different shares to reflect your respective contributions. That way there can be no misunderstandings or disputes further down the line.
Other issues which you need to consider if you remain unmarried, and which would cost you financially in the long run, include:
- you will not automatically inherit from your partner’s estate on the first death as you would if you were married;
- there are not the same tax reliefs available for unmarried couples as there are for spouses;
- you do not have the same rights as a legal spouse if your partner loses capacity; and
- you do not have the same automatic benefits under pensions or insurance policies as a legal spouse
It is essential that you have in place an up to date Will and powers of attorney and that you have taken the necessary advice on any tax planning you may need, if you are cohabiting with your partner.
By way of contrast, there are clear financial advantages to being married. However, the key disadvantage assuming you want to protect the wealth you have retained after a divorce, is of course the financial claims which can be made on separation. The safest ways to avoid such claims is of course not to remarry but, if you do, get a pre-nup!!
For more information, please see www.cohabitation-law.co.uk