It is common for one or both spouses to form a new relationship following their separation but before their financial arrangements have been resolved. Sometimes, they will live with their new partner or will have an intention to live with them soon.
So, what is the impact of cohabitation on the financial settlement with your estranged spouse? Are you prejudicing your case if you move in with your partner or are you entitled to more if your spouse is now living with another?
One of the main factors when determining the split of assets on divorce is needs.
Capital Needs | Cohabitation
If you or your spouse live with a new partner, or have plans to in the near future, this could have an impact upon capital needs, in particular the need to obtain suitable housing for yourselves and any minor children.
We determine housing need by working out what budget would be required to house each spouse and any children. This is achieved by identifying the cost of suitable properties and ascertaining what each party’s borrowing capacity will be, as against the equity held in the family home. If one of the parties is in a cohabiting relationship, there is an argument that their borrowing capacity should be calculated alongside their new partner. This is likely to increase their mortgage raising ability and, in turn, decrease their need for capital.
The Court can consider the resources of a new partner, as far as they are known to the parties. This qualification is important to note. There is no obligation on the new partner to provide information. If there is limited capital and one spouse is already housed in a property owned by their partner, there may be an argument that their housing need is already met, at least in the short-term.
Whether cohabitation will impact the division of capital and, if so, to what extent will depend on your financial circumstances. If there is enough capital for both spouses to be housed with an equal division, these arguments are likely to carry less weight. Judges have also been known to comment that a new relationship should not prejudice an individual’s entitlement to a fair share of the matrimonial pot.
Cohabitation also comes into consideration when looking at each spouse’s ability to meet their outgoings. There is an assumption that cohabiting partners will pool their resources to meet their daily needs, meaning their income will go further. This may create a surplus of income which could be used to pay spousal maintenance if the other spouse has a shortfall between their income and outgoings.
Reversing this, if you may otherwise be entitled to spousal maintenance, this claim is likely to be prejudiced if you are living with another as the Court will expect you to share your costs with your partner.
If you have yet to resolve your finances with your spouse, cohabitation with a new partner is not a decision to take lightly as it could impact upon your financial settlement. That said, it is not a given and will depend entirely on your circumstances. In the same vein, there is no guarantee that your spouse’s new relationship will mean you are entitled to more.
In either scenario, it is recommended that you speak to a solicitor at an early stage to determine what effect cohabitation could have for you.
If you require assistance with Cohabitation with a new partner on divorce, please feel free to contact our Family team.