When a key comes before a ring

  • Insight

19 October 2018

For many couples, a key is likely to come before a ring and seeking expert advice at various stages of your life will ensure you are as well prepared and well informed as you can be.

Three-quarters of millennials now believe that cohabitation before marriage (or civil partnership) is a good thing. There are also more unmarried older adults these days, and the trend is growing for cohabitation rather than marriage. Recent research from Scottish Widows suggests older generations are happier to share financial information with their partner at an earlier stage than younger people, with only one in 10 millennials saying they are immediately comfortable with this, compared to one-third of over-55s. The research also reveals that one in five Britons are in a financially incompatible relationship, with almost one-fifth wishing they had discussed finances earlier in a relationship.

Planning a life together with a partner is a big event and moving in together should be a reason to celebrate. People have many reasons for cohabiting. For some it can be more convenient than living separately and will work out more cost effective, whereas others may just want to have that closeness and provide stability for children or families from previous relationships.

Whatever your reason for living together and whether you are going on to marry or not, in Scotland the vast majority of couples will fall under the Family Law (Scotland) Act 2006's definition of cohabitants. This sets out cohabitants' claims on separation or where the relationship ends by the death of one of them. Most may not be aware that cohabitants in Scotland can make a claim at the end of a relationship.

Indeed, many couples think that because they are living together, they automatically have the same rights as married couples, but this is not the case. Common-law marriage no longer exists in Scotland, even if you have lived with your partner for many years. While the 2006 Act enables a claim to be made in the event of separation or the death of a cohabiting partner, claims are limited and may not cover all the needs of an individual, and may not fully reflect the wishes of a deceased partner.

Living Together Agreements

For couples considering cohabitation, a living together agreement might also be useful to set out who gets what, including repaying any family loans, which avoids the stress and cost of a disputed claim at the end of the relationship. Cohabitation agreements are advisable where parties wish to contract, so far as possible, out of the 2006 Act or wish to control the level of any claims made.

Living together agreements, and cohabitation agreements, are agreed contracts which can include a record of what you own, how you will manage your finances throughout the relationship and how you will deal with various matters in the event of separation. The agreement will encourage you to think about the best way for you to organise your finances and commitments at an early stage. If the relationship were to end, the agreement will seek to ensure that both of you can move on amicably and in the best financial position for you and your family.

Living together agreements are specific to the individual circumstances of a couple and can include as much or as little as they wish. At its simplest, the agreement can state that neither partner will make a claim in the event that the relationship breaks down.

They can also set out who gets what on separation or death of a partner, including repaying any debts or family loans. This avoids the stress and cost of a disputed claim at the end of the relationship. It is also advisable that parties have updated wills.

Making an agreement before cohabiting can strengthen a relationship and give both partners a greater sense of security, especially if there are children involved. Discussing attitudes to finances and future financial plans can serve as the backbone to cohabitation, making it much easier to plan your life together. Of course, it is hoped that couples will never have to rely on the terms of their living together arrangement, but when they do, agreeing at the outset something as simple as who gets custody of the dog may avoid painful disagreements later.

Discuss finances together, especially where family money is involved.

Nearly a quarter of  Scots borrow large amounts of money from their parents and the Bank of Scotland uncovered earlier this year that Scottish siblings have loaned a whopping £161m to their brothers and sisters.

If you're buying a home with your partner, family can be a source of helpful finance. Few families take the trouble to get lawyers to document a loan or gift, but if they did, a lot of trouble could be avoided. This is particularly so upon separation.

Most people in a new relationship would probably not consider visiting a family lawyer. Likewise, purchasing a property is already a costly process with lawyers involved and the prospect of involving more lawyers may seem unappealing. However, if your family is providing the funding for that purchase, you should consider protecting their investment with a pre-purchase agreement. It is a common misconception that you automatically get back what you put in to a property purchase; however, if you make unequal contributions to the purchase but take title in joint names, that will not be the case without an agreement to this effect in place.

Do I need a pre-nup?

If you decide to marry, a pre-nuptial agreement is a good idea, especially as people these days tend to marry later, when they have already built up some wealth. Pre-nuptial agreements are also popular if either spouse (or both) is looking to protect family money or is entering into their second marriage.

No longer the preserve of Hollywood A-listers, a pre-nup is now fairly common. It can be a simple ring-fencing exercise of pre-marriage assets and wealth, or it can involve a more complex review of potential inheritance and company restructuring.

What is family law?

Family law used to be known as divorce law. Now family law reaches many more people and lawyers specialising in this can add value and advice at various stages in life. Nowadays, family lawyers are much more than just divorce lawyers, although that remains an important part of what they do.

As well as advising on family or relationship aspects, we will help clients to make or review their will, consider making a power of attorney and generally assess their finances with an adviser to ensure they are well informed and well prepared for the road ahead.

Where a marriage does not last, the family lawyer is on hand to help unravel the family finances, assist in arrangements for the children and will help a client come out of a divorce and move forward having achieved a fair and reasonable outcome.

A family lawyer will be with the client throughout the various stages in their life. When you think about the reach of family law, we can be, and sometimes need to be, beside a client each step of the way. A family lawyer can help guide couples through the potential issues of financial decisions they take and seek to preserve family wealth from potential claims. Where a separation happens, we can advise on the appropriateness of any claim, whether to be made or defended.

Whether you're just starting out, or are part of a couple entering marriage or exiting on a divorce, a family lawyer is there to help. While not every relationship lasts, we like to think that with our support and advice the experience will not be as costly and stressful as it could otherwise be. Through life's journey, a family lawyer can help you get to where you want to be.

This article originally appeared in the ICAS Law Review 2018.