Following the breakdown of a marriage, new relationships can start. You may be considering moving in with a new partner and might be wondering just how this will impact your financial divorce settlement.
This is a common question, which requires consideration of:
- What ‘cohabitation’ is;
- How the Court determines cohabitation; and
- What significance the Court places on cohabitation when determining a financial settlement.
What is Cohabitation?
Whilst there is no specific legal definition of ‘cohabitation’, it is widely used to describe situations where a couple, who are 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?
There is no specific science to this however, there are certain factors the Court take into consideration in determining whether a couple is cohabiting. This may include:
- The nature of the relationship (for example the stability and its length),
- 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. The Court takes a ‘big picture’ approach to determining cohabitation; 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 your respective financial positions for the purpose of reaching a fair settlement. This is done through completing a Form E.
When completing the Form E, both parties are required to confirm whether they are cohabiting, or intend to cohabit with a new partner in the next six months.
Importantly, the Form E is completed by signing a statement of truth to confirm you have provided full and frank disclosure, and that this disclosure is complete to the best of your knowledge and belief. If either party is dishonest when completing the Form E, criminal proceedings may be brought.
Following the exchange of Forms E, there is an opportunity to ask further questions concerning their disclosure, including about any new partner and that partner’s financial situation.
If you believe that your spouse is not being honest on their Form E regarding their living situation, we would recommend speaking with a specialist Family lawyer. Family solicitors are experienced at reviewing bank statements and other documentation to compile and collate evidence of cohabitation, where this is considered relevant to your case.
What impact would moving in with my new partner have on my financial divorce settlement?
In deciding whether to move in with a new partner prior to reaching a financial settlement, you should be cautious of the following:
- Your new partner’s financial affairs may be considered by the Court, which could affect your share of the matrimonial assets, especially where that pot is insufficient to meet the needs of both parties; and
- The involvement of a new partner 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 housing needs. If either party is cohabiting, it could be suggested that the new partner’s mortgage raising capacity should also be considered. This is because pooling the capacity of two individuals usually increases the overall mortgage raising ability. 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 and several other factors.
How will cohabitation affect income needs?
Cohabitation can be relevant in determining income needs and whether spousal maintenance should be payable. Spousal maintenance can arise if one spouse is unable to meet their reasonable income needs from their income and the other has an income surplus 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.
It is also important to consider the position where a new relationship does not survive. Reaching an agreement in relation to your financial claims on the basis that your new partner will be supporting some of your needs, may leave you in an unsustainable position if that relationship ends shortly thereafter.
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 financial Consent Order. Irrespective of whether it is mentioned in a Consent Order, a new cohabiting relationship may 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, subject to the terms of the Consent Order.
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 changing your living arrangements. We would recommend you speak to a specialist family lawyer at Stephens Scown to determine the impact cohabitation may have in your particular circumstances.