From a legal perspective, usually the most complex issue to resolve upon separation is agreeing a financial settlement.
For those going through a divorce or the dissolution of a civil partnership, there is a detailed framework of rules which govern the division of assets from the payment of maintenance/child support. Although those rules have been in place for nearly 40 years, they can be extremely difficult to understand.
By contrast, for unmarried couples (whether opposite sex or same-sex), there is no set of rules governing the division of assets upon relationship breakdown. Legal claims do not automatically arise upon a relationship breakdown – “common-law marriage” is no more than a myth.
Financial Claims On Divorce/Dissolution of Civil Partnership
Legal claims automatically arise upon the ending of a marriage or civil partnership. Those claims include the right to maintenance (otherwise known as periodical payments) for a spouse/civil partner or for children of the relationship. There are also claims for the transfer or sale of property (usually the family home), payment of a lump sum and a right to share in pension provision.
If a couple do not engage in the collaborative process and invite the court to resolve their financial claims, then the financial settlement will eventually be imposed by a judge. Where a judge is invited to make a decision, that will be based upon the following checklist:-
(a) The court’s first consideration is the welfare of any minor children.
(b) The court will take into account all of the available assets, income, earning capacity and other financial resources.
© Assets and income are then balanced against the needs of the couple. Those needs usually boil down to housing needs and day to day income needs.(d) The court looks at the length of the marriage/civil partnership and the ages of the husband/wife or civil partners. When looking at the length of the marriage/civil partnership, the court can take into account any prior period of cohabitation.
(e) The standard of living enjoyed during the marriage/civil partnership may be relevant.
(f) Contributions made towards the welfare of the marriage/civil partnership.
(g) Any physical or mental disability.
(h) In very extreme and limited cases, the bad behaviour or conduct of either person. These arguments are however exceedingly rare.
(i) The loss of any future benefits, such as rights under a pension.
The checklist set out above gives judges a wide discretion to make decisions regarding the division of assets and the payment of maintenance. Accordingly, if proceedings are disputed through the courts, then the eventual outcome can be uncertain. By contrast, within the collaborative law process, couples are guided by the checklist set out above, but are free to make decisions which suit their own needs and wishes.
By way of example, in one given divorce it may be highly likely that a judge would order the family home to be sold, yet a couple may both wish for the property to be retained for the benefit of the wife and the children. If that is a joint aim of the couple, then it is more likely to be achieved through the collaborative process than through the court.
Financial Claims of Cohabiting Couples
As there is no concept of “common-law marriage”, no automatic legal rights arise upon the breakdown of the relationship. For example, an unmarried couple could live together for many years, yet one may have no financial claims against the other when the relationship breaks down.
There is no automatic right to claim in respect of pension provision, savings or business assets, nor is there any right to claim for “spousal” maintenance. If there are children of the relationship, then a claim can be made for child support through the Child Support Agency.
Whether claims arise in respect of the family home or any other property will entirely depend upon property law principles.
By way of example, if a couple own a property which is held in joint names, then there is an assumption that the property is owned equally, regardless of the financial contributions made to that property.
By contrast, if the property is owned in the sole name of one person, then it may be very difficult for the other person to establish a legal claim on that property. It is necessary to use complex trust arguments. For example, if the property is owned by one person, but the other has made a direct financial contribution to that property (such as paying towards the deposit or paying for significant improvements), then it may be possible for that person to assert a legal claim upon the property.
If there are children of the relationship, in addition to being able to pursue a claim through the Child Support Agency, it may also be possible to bring claims under Schedule 1 Children Act 1989. This is a relatively rarely used legal provision, but under Schedule 1 the court may provide for the needs of the children of the relationship whilst they are minors.
In view of the rigid and limited financial claims which arise for unmarried couples, it is clear that the collaborative process provides an extremely attractive alternative to court. It enables unmarried couples to agree constructive and imaginative solutions to the problems arising upon their relationship breakdown.
