Concept for - Cohabitation and its impact on divorce financial settlements

When a married couple go their separate ways, many will look to quickly move on by starting a new relationship. Some of these relationships might develop and lead to the new couple moving in together. We are often asked whether cohabitation with a new partner will impact your financial settlement.

To answer the question, we first need to understand how the court looks at cohabitation and what is meant by cohabitation and how the Court determines its significance.

How will the Court determine if my spouse is in a cohabiting relationship with a new partner?

Determining whether a spouse is in a cohabiting relationship is not an exact science. However, the Court will look for certain patterns indicative of a couple living together. It is not as clear-cut as a couple living under the same roof. The Court will take account of the stability and permanence of the relationship and consider whether the relationship involves a sharing of the couple’s daily lives and financial affairs.

How can I prove my spouse is in a cohabiting relationship with a new partner?

It can sometimes be tricky to prove that your former spouse is cohabiting with a new partner. In Financial Remedy proceedings you and your spouse are required to disclose whether you are cohabiting or intending to cohabit with a new partner when completing the Form E financial disclosure document. It contains a statement of truth, which means that if you or your spouse are dishonest about whether you cohabit it may amount to a criminal offence.

Following an exchange of Forms E, you can ask questions concerning your spouse’s new partner and their financial situation.

If I move in with my new partner what impact will this have on my financial divorce settlement?

Cohabiting with a new partner before you have reached a financial settlement with your former spouse can cause complications, and we would always flag a note of caution around this, not only owing to the degree to which it may draw the financial affairs of the cohabitee into the mix, but also due to the psychological distraction it can sometimes cause, diverting attention away from financial settlement.

A new partner’s finances are more likely to be considered relevant by the court if the relationship is a deeper and more enduring one (i.e. if a couple have bought or are renting a house together, or if they are engaged, for example) and the matrimonial pot is of itself insufficient to meet your and your spouse’s needs.

How will cohabitation affect housing needs?

The Court will take account of your respective mortgage raising capacities when considering housing needs. If you or your spouse are cohabiting, a suggestion might be made that the new partner’s borrowing capacity should also be included in the calculation. Pooling borrowing capacities is likely to increase the overall mortgage raising ability and can in turn lead to an argument that not quite so much is required from the matrimonial asset pool to rehouse.

Of course, the newer the relationship and less obviously long term it is, the less likely that argument should succeed. If the net asset pool provides you and your spouse with suitable housing and an equal division of the capital, a new partner’s finances are less likely to be taken into consideration.

How will cohabitation affect income needs?

Cohabitation can be relevant when assessing income needs and potential claims to spousal maintenance. Spousal maintenance can arise if one spouse is unable to meet their reasonable income needs from their income and the other has a surplus income available to meet this deficit.

A claim for spousal maintenance may be less likely to succeed if the spouse requiring it is in a cohabiting relationship, since the Court might assume the cohabiting couple will pool their incomes together to meet their joint outgoings.

When considering a new partner’s contribution to outgoings, the Court can consider what the new partner ought reasonably to be contributing and is affordable rather than what they are actually paying for. Two household incomes are more likely to cover household expenses, and the addition of a cohabitee’s income to the equation may remove the need for any spousal maintenance being paid at all.

The reverse applies where the economically stronger spouse is in a cohabiting relationship. The cohabitation may generate a surplus of household income and sharing of outgoings which could result in a greater income pool available to meet the financially weaker spouse’s spousal maintenance claims.

Can my former spouse make a claim to my new partner’s assets?

In most cases, your former spouse has no entitlement to make a claim against your new partner’s assets. A new partner’s financial position is only relevant to the extent that it increases your ability to meet your needs.

How will cohabitation affect an existing spousal maintenance order already in place?

Unlike remarriage, cohabitation does not automatically bring a spousal maintenance claim to an end unless it is specifically referred to in a Consent Order.

Whether or not the cohabitation is referred to in the Consent Order, a new cohabiting relationship may warrant the level of maintenance payable to be reviewed. This might be done by agreement or the Courts are able to consider applications to vary the level of spousal maintenance payable in certain instances.

If you are considering cohabiting with a new partner and are yet to resolve the finances with your spouse, it is important to understand the legal implications this may have on any financial settlement before you make the decision to move in with your new partner. We would recommend you speak to a specialist family lawyer to determine the impact cohabitation may have for you.

Please contact our Family Law team if you wish to discuss cohabitation or anything relating to divorce and separation.