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Separating after living together (Non Married Couples) - Property & Financial Issues
The process of dividing up the assets and debts who gets the house?
When a couple are married and the relationship ends, matrimonial legislation allows the Courts to deal with the financial arrangements; ie to make decisions as to what should happen to property and whether maintenance should be paid. The Court has a wide discretion in realtion to married couples and taks into account various factors to try and ensure overall fairness.
Where a couple are living together (cohabiting), however, and the relationship ends, there is no legal provision for maintenance. Neither, in relation to the division of the couple`s property, is there any immediate notion of fairness or reasonableness built into the law.
Sometimes property is jointly owned and the deeds are in both the partners` names (see further below). If this is not the case, being awarded a share in any property depends on being able to establish ownership, either based on a `financial contribution` or a `common intention`.
So for example, if a woman lives with her partner for 20 years and brings up their children in his house, she cannot expect any maintenance for herself. Nor will she share in the property if she has not paid for it either directly or, for example, by making a contribution to the mortgage, unless she can prove it was agreed otherwise. It does not matter that the reason she did not contribute financially was that she could not work because she had to be at home with the children. Even if she did make some financial contribution, establishing ownership can be difficult as the law in this area is not entirely clear.
This lack of legal provision upon separation can come as a shock to some unmarried couples who have been living under the false belief that they have become `common law` spouses.
It is important to note, however, that whilst unmarried partners have no financial liability towards each other in terms of income, the parent with whom the children do not live will always be liable to maintain them financially.
With regard to property and other capital assets, however, the basic principle with cohabitees, (unlike with marriage where the yardstick as to division of all property regardless of how owned, is a 50/50 split), is that neither has a claim to their partner`s assets, unless these are jointly owned. The myth of the common law spouse acquiring rights akin to married couples after a couple of years is sadly still far too prevalent.
Similarly, unless debts are held in both parties` names, then these will be the responsibility of the person in whose name they are.
In either case, this principle may be refuted however, if sufficient reason can be shown as to why the basic rule should be ignored or departed from. As stated above, however, this can be difficult to prove.
In establishing whether a cohabitee has any claim to their partner`s assets, the law looks to equitable principles (ie, principles of fairness), should such a claim be made. But it`s not entirely straightforward.
PROPERTY IN SOLE NAME OF ONE PARTNER
If the house is held in your name or your partner`s name only, then the non legal owner would have to establish an interest in the property if they wished to obtain a financial share in respect of it. To establish such an interest, the non legal owner would need to establish either a resulting or constructive trust (see below).
It may be possible for the non legal owner to register a form of charge against the property by notifying The Land Registry of their potential beneficial interest. This protects a non legal owner`s beneficial interest in the property in that should the legal owner try to sell it at any time, then a prospective purchaser would want to see such charge removed from the register before completion could take place.
A non owning cohabitee will need to prove that either a resulting or constructive `trust` exits and that the owning cohabitee holds the whole of the property or asset legally (ie on paper) but does so on the basis that he or she owns part of the property or asset `on trust` for the other cohabite, until such time as that share becomes payable (as on separation for example).
If a trust can be established, then the non owning cohabitee will be entitled to a share in the property or asset (not necessarily 50%). This is known as a beneficial or equitable interest, rather than a legal one. The precise share will need to be determined depending upon the specific factors in each individual case.
A resulting trust arises when a non owner has contributed directly to the purchase of the property or asset or has helped to increase its value, such as by having made mortgage payments or having paid for an extension. Paying for bills and groceries alone has generally not in the past been considered sufficient financial contribution by the Courts to establish a resulting trust.
A constructive trust may be established on the basis of wider equitable principles so that even if a non owner had not contributed financially towards the property or asset, he or she may be able to prove a beneficial interest on the basis that it would be unfair otherwise. To do this, a non owner will need to show that the owner`s conduct was such that the non owner believed he or she was to share the property or asset and acted to his or her detriment in reliance on that promise. It is very difficult to prove this type of trust as it is often one party`s word against another`s.
JOINTLY OWNED PROPERTY
Joint Tenants
If the house is held in the names of you and your partner as joint tenants, the basic principle is irrelevant as regards that asset and you are both, on the face of things, entitled to a 50% share in the net equity in the property; the net equity being the current market value of the house, less the amount required to redeem the mortgage and any notional or actual costs of sale.
If, despite how the property is legally stated to be held, one party feels that they have still made a greater contribution to the property than the other then he or she may seek to establish a greater beneficial interest. To do this, the person seeking to obtain the greater share would need to demonstrate that they had made a greater direct financial contribution towards the deposit or mortgage on the property and / or made a more substantial contribution to improving the property through any renovations made, either by paying for them or physically carrying them out, than the other joint owner.
Severance / Ending a Joint Tenancy
A joint tenancy can be severed by either of the joint owners converting it into a `tenancy in common`. This should be considered by joint tenants when a relationship has broken down.
What it means is that if your partner dies before you then if your house is still held in joint names as joint tenants, then your partner`s share (ie the whole house) will automatically pass to you regardless of any contrary provision in your partner`s will, whereas if the joint tenancy has been severed, then your partner`s share will be left to their estate to be passed on by will, or the rules of intestacy in the absence of any will.
The usual way to effect severance is by one joint tenant providing written notice to the other held in common and not jointly.
In practice, you may wish to consider severing a joint tenancy if you are in poor health and do not wish to run the risk of your former partner receiving your share of the property in the event of your death. Remember, however, that this works both ways! If you sever the tenancy and your partner predeceases you, then similarly their share will no longer automatically pass to you.
If you do sever a joint tenancy it is important to make sure you have an up to date will specifying your intended beneficiary.
If you want to make a will then Womenlegal`s Louise can help you.
Tenants in Common
Sometimes a couple may own their property jointly but as what is known as `tenants in common` rather than joint tenants.
This may be done if, for example, one party contributed the deposit on the purchase of the property or contributed funds from the sale of a previously owned property and it is intended that that party regain that share when the jointly owned property is sold. Similarly, if it is known at the time of purchase that one party is going to be paying more of the outgoings on the property than the other. In such circumstances, there usually exists a document known as a `Declaration of Trust` to record the extent of each party`s share. Alternatively, the shares may just be started on the transfer document itself transferring ownership of the property from the sellers to you and your partner. If no such declaration exists then it is presumed that tenants in common hold a 50% share each.
Negotiations
The first thing to do is to establish how a property or assets are legally owned and then assess whether there is any reason to suggest that to adhere to the legal ownership is unfair. If so, what is a fairer outcome? For example, if we take the example mentioned above with Jack and Jess, would it be fair if Jack inherited 10,000 from his Mum and paid it off against the mortgage on the house he owns with Jess for Jess to still get 10% or 10,000 more from a future sale of the house? Of course not. In these circumstances, the parties are equal again. The legal documents will show that Jess has an interest over 50% but the principles of equity suggest that this should no longer be adhered to.
What if Jack suggests this to Jess but she refuses to agree, saying simply that the legal documents say she gets more and that`s the end of the matter? Jack would be advised to root out his bank statements proving that his inheritance of 10,000 was paid out to the mortgage lender. He could then ask Jess to reconsider and let her know that if she still didn`t agree he would have to apply to the Court under The Trust of Land and Appointment of Trustees Act 1996 for the Court to make a declaration as to what shares they should each have.
Alternatively, either Jack or Jess might wish to buy the other out of their interest in the property. Let`s assume they now agree that they are entitled to equal shares, that the house is worth 100,000 and the mortgage is 50,000. Perhaps Jess has a better income than Jack and can raise an increased mortgage in her own right to buy him out but he couldn`t do it the other way around. Jack is going to want at least 50% of the net equity. 3% of the purchase price should cover costs of sale. 3% of 100,000 is 3,000. 100,000 - 3,000 = 97,000 - 50,000 mortgage = 47,000 net equity / 2 = 23,500. If Jess can raise the 23,500 Jack wants then he may agree to the property being transferred from their joint names into her sole name.
However, if Jess can`t raise the sum needed or Jack simply won`t agree to a transfer, then there is no real option but to sell. Both joint owners will need to agree on a sale though. If one won`t then a Court application, as mentioned above, would be the next step.
Children Issues on Separation of Non Married Parents
Residence and Contact arrangements do I need a Court Order?
After a separation, it is generally a good idea to get children into a routine as far as contact with the non resident parent goes and many parents do manage to reach an amicable, informal agreement between themselves. In these circumstances, no Court Order is needed or even desirable.
Other parents find it more difficult, however, often due to some simmering resentment still between them. If this prevents arrangements for the children being made and is not rectified quickly, it can lead into a downward spiral of entrenched problems, with the children at risk of becoming pawns in a battle between their parents - and of suffering the emotional harm which that entails. After all, we hear increasingly of research showing the negative impact of separation on children. The way the situation is handled, however, seems to be the key indicator of how well children will adapt to the changes.
Preparing sensibly for contact by setting up an agreed, regular basic routine and organising holidays well in advance, provides certainty for both children and parents. It will particularly help to avoid children suffering anxiety over the situation, unjustified feelings of fault and the unfair pressure of `having to choose`. Older children will doubtless want to have some input in the arrangements, however. It is equally important to recognise that the routine is there as a foundation and not set in stone. There may need to be a degree of flexibility in any settled arrangements, to accommodate any unforeseen and unavoidable occurrences.
The focus should be kept on the needs of the children, who in many cases will benefit from maintaining regular, sustained contact with both parents and spending quality time with each, in order to nurture and develop their relationships. It is a lifelong responsibility for both parents to make sure this happens.
The crux of making contact work, for the children`s sake, is for parents to always strive to treat each other with respect and fairness when it comes to making arrangements for the children, though it is not always easy to do when both parents may be harbouring deep feelings of resentment. The important thing then is to refocus on what is in the best interests of the children.
It is also fundamental, for contact to work, that children do not feel as though they are betraying one parent by spending time seeing or talking to the other. Children may want to see one of their parents but feel unable to express this wish for fear of reprisal from the other parent, having become aware already (maybe subconsciously even), that the other parent would prefer the children not to, perhaps by having overheard adult conversations or simply by absorbing any vibes of bitterness and distrust simmering between parents.
Children might even say that they don`t want to see the other parent. Whilst it is important to consider children`s wishes, appropriately to their age, parents should also examine their own motives and behaviour and ensure that their children`s wishes have not been inadvertently influenced by them and perhaps therefore not be truly representative of what the children`s wishes, and best interests, really are. Children can benefit greatly from reassurance in these circumstances that both parents actively want them to see the other.
The Legal Framework in relation to Children
The Court considers that the primary responsibility for bringing up children rests with both parents and therefore they will not make any Orders in respect of the children unless they consider that doing so would be beneficial to the children. This is called the No Order principle.
The Court will therefore generally not become involved in the arrangements for children unless one of the parents specifically apply for it to do so.
Should there be any issues concerning the children that you and your former partner cannot agree about, including with whom they should live, then it is open to either of you to make a formal application to the Court.
When the Court is considering any question relating to a child`s upbringing or property, the welfare of the child is of paramount consideration. The Court considers a number of factors in deciding whether or not an Order should be made in respect of a child, which are as follows:-
The ascertainable wishes and feelings of the child concerned (considered in light of their age and understanding).
- Their emotional, physical and educations needs.
- The likely effect on them of any change in their circumstances.
- Their age, sex, background and any characteristics of theirs which the Court considers relevant.
- Any harm which they have suffered, or are at risk of suffering.
- How capable each of their parents are or any other person in relation to whom the Court considers the question to be relevant is of meeting their needs.
The Court will not make an Order in respect of a child unless they consider doing so will be better for the child concerned than to make no Order at all.
The type of Orders that the Court can make in relation to a child include the following:-
Residence Order
- An Order settling the arrangements to be made as to the person with whom a child is to live.
- Contact Order
An Order requiring the person with whom a child lives or is to live to allow the child to visit or stay with the person named in the Order or for that person and the child otherwise to have contact with each other.
- Specific Issue Order
An Order giving Directions for the purpose of determining a Specific Issue which has arisen, or which may arise, in connection with any aspect of Parental Responsibility for a child.
- Prohibited Steps Order
An Order that no step which could be taken by a parent in meeting his Parental Responsibility for a child and which is of a kind specified in the Order shall be taken by any person without the consent of the Court.
Parental Responsibility Do I have it? Does he have it? What is it?
The Children Act 1989 introduced the concept of Parental Responsibility which was a deliberate shift away from the idea that parents have rights over their children towards the idea that they have responsibilities towards their children. The Act defines the concept of parental responsibility as all the rights, duties, powers, responsibilities and authority by law which a parent of a child has in relation to the child and his property.
It used to be the case that only Mothers automatically acquired Parental Responsibility for their children. However, following changes to the law introduced by The Adoption and Children Act 2002, even if parents were not married, if the Father`s name is on the child`s birth certificate and the child`s birth was registered after 01.12.2003, he will automatically acquire shared Parental Responsibility with the Mother.
Otherwise, Fathers can only acquire it in one of the following ways:
- By marrying the Mother
- By agreement with the Mother, in which case the agreement is recorded on a prescribed form and lodged with the Court
- By Order of the Court (in which case a Father would have to demonstrate that he was sufficiently involved in the child`s care and responsible for the child`s welfare before it would be granted).
- By obtaining a Residence Order
- By being appointed a Guardian by the Mother or the Court in which case the Father will only truly attain Parental Responsibility on the Mother`s death.
What having `PR` as a parent means in practice is that you should be involved in any important decisions being made in relation to a child`s upbringing and care, such as decisions about education, medical treatment and religion. It also generally means that neither of parent can take the child abroad without the other`s consent. Parental Responsibility can be exercised by one parent independently, however, for example in relation to simple, everyday decisions such as keeping a sick child off school etc or in relation to emergency life saving medical treatment where the other parent cannot be contacted. However, the general idea is that both parents should be equally responsible for the child`s welfare and involved in decision making for the benefit of a child.
Child maintenance payments How much should I get and how do I get it?
With regard to child maintenance, this is calculated generally using the guidelines of the Child Support Agency. If the resident parent is not currently in receipt of Department of Social Security Benefit, the Child Support Agency do not automatically have to become involved and it is therefore possible to agree a figure for child maintenance between the two of you.
If this cannot be agreed, however, or the resident parent is in receipt of benefits, and an application was made to the Child Support Agency, the non resident parent will be paying maintenance of approximately 15% of their net income with regard to 1 child, 20% for 2 children or 25% for 3 or more children, subject to potential reductions dependant on the number of nights the children stay with the non resident parent and how many qualifying children the non resident parent has in their own household. For further information on child maintenance paid via the Child Support Agency, you can visit their website at www.csa.gov.uk. You can also use their website calculator to get a rough idea of the likely amount of maintenance payable.
The non resident parent is liable to maintain the children until they reach the age of 17 or finish full time secondary education.
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