Concept for - Cohabitation and its impact on divorce financial settlements

Following the breakdown of a marriage, you may be considering moving in with a new partner and are wondering just how this will impact your financial divorce settlement.

This is a question we are often asked but to answer, we need to understand:-

  • what cohabitation is;
  • how the Court determines cohabitation; and
  • what significance the Court places on cohabitation when determining a financial settlement.

What is Cohabitation?

Although the term ‘cohabitation’ at present has no specific legal definition, it is widely used to describe a living arrangement whereby a couple who is not married or in a civil partnership live together in the same household. This term can apply to both opposite and same-sex couples.

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

Determining whether an individual is in a cohabiting relationship is not a science, however, there are certain factors the Court take into consideration in deciding whether a couple is cohabiting. The Court is likely to consider:-

  • the nature of the relationship (for example the stability and length of the relationship),
  • the permanence of the relationship, and
  • whether the relationship involves a sharing of the couple’s daily lives and financial affairs.

The Court is also likely to place emphasis on whether the couple presents themselves to the outside world as a cohabiting couple even if in private, the couple do not sleep in the same bed or have an active sex life. As you can see, the Court takes a ‘big picture’ approach to determining cohabitation and it is not as simple as two people living under the same roof.

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

Due to the subjective way in which cohabitation is determined by the Court, it can often be tricky to prove that a former spouse is cohabiting.

The simplest way to prove this, is to commence full and frank financial disclosure which require you and your spouse to fully and honestly provide accurate information about their financial position for the purpose of reaching a fair settlement. This is done through completing a Form E.

When completing the Form E document, both parties are required to disclose whether they are cohabiting or intend to cohabit with a new partner in the next six months. Importantly, the Form E contains a statement of truth. If either party is dishonest when completing the Form E, criminal proceedings may be brought against you under the Fraud Act 2006. Following the exchange of Forms E, you can ask further questions concerning your spouse’s new partner and their financial situation.

If you believe that your spouse is not being honest on their Form E regarding their living situation, it may be best to speak with a lawyer. Family solicitors are experienced at reviewing bank statements and other documentation to compile and collate evidence of cohabitation.

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

If you are deciding whether to move in with your new partner prior to reaching a financial settlement, we would advise caution. This is for two reasons – firstly, your new partner’s financial affairs could be considered by the Court which could affect your share of the matrimonial asset pot especially if the matrimonial pot is insufficient to meet the needs of both parties; and secondly, to a lesser degree, it can create a psychological distraction by diverting attention away from the financial settlement due to a sense of complacency and lack of urgency. This could lead to your spouse issuing Court proceedings, or even seeking a cost order against you if Court deadlines are not met.

How will cohabitation affect housing needs?

The Court should take the parties’ respective mortgage raising capacities into account when considering the housing needs of you and your spouse. If either party is cohabiting, it could be suggested that the new partner’s mortgage raising capacity should also be considered. The reason for this, is the potential to increase the overall mortgage raising ability by pooling borrowing capacities. In this scenario, the cohabiting spouse may therefore receive less from the matrimonial asset pool to rehouse. Of course, this is conditional on the length of the relationship.

How will cohabitation affect income needs?

Cohabitation can be relevant in determining income needs and potential 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 maintenance is in a cohabiting relationship. This is because the Court may 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 would consider what the new partner ought reasonably to be contributing to needs rather than what they are paying. The Court generally views two household incomes as more likely to cover household expenses than one.

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 if they do not have sufficient income to meet their own outgoings.

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 the Consent Order. Irrespective of whether it is mentioned in the Consent Order, a new cohabiting relationship would likely warrant the level of maintenance payable to be reviewed. This can be done via mutual agreement between the parties, or alternatively through an application to the Court. The Court has the power to consider applications to vary the level of spousal maintenance payable if it deems it necessary.

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 at Stephens Scown to determine the impact cohabitation may have for you.