Relationship breakdown is difficult, and the financial implications can be one of the most stressful aspects. Importantly, the law treats married couples and cohabiting partners very differently, and the steps you can take to protect yourself also vary depending on your situation.
How finances are dealt with on divorce
When a married couple divorces, the court has wide powers under the Matrimonial Causes Act 1973 to redistribute finances in whatever way it considers fair, taking account of all circumstances and giving priority to the welfare of any children under 18.
Capital (Property, Savings and Investments)
The court may order the sale or transfer of property, divide savings and investments, or adjust how assets are shared. Although equality can be a starting point in some cases, most cases revolve around meeting needs, especially housing needs if resources are limited.
Income (Spousal Maintenance)
Spousal maintenance may be ordered where one party cannot meet their income needs without support. Maintenance is usually short-term but can be longer-term, depending on factors such as earning capacity and childcare responsibilities.
Pensions
Pensions are often one of the most valuable marital assets, particularly where there are substantial private schemes.. A court will commonly make pension sharing orders, giving each spouse a fair share to meet income needs upon retirement.
How finances are dealt with when cohabitees separate
Cohabiting couples do not have the same rights as married couples. They do not acquire rights simply by living together, no matter how long the relationship lasts.
Capital (Property, Equity and Contributions)
Cohabitants do not have access to the divorce system. The court cannot redistribute property based on fairness or needs. Instead, property disputes are resolved using trusts and property law. The court may order housing provision under Schedule 1 of the Children Act 1989, but this is for the benefit of the child only. Often, the home is provided only until the child reaches adulthood, after which it reverts to the financially stronger parent—leaving the caregiving parent without long‑term security.
Income (Maintenance)
There is no spousal maintenance for cohabitants. As with married couples who have children, there may be grounds for a child maintenance claim. This usually comes under the jurisdiction of the Child Maintenance Service.
Pensions
Unlike married couples, cohabitants have no right to share each other’s pensions on separation.
How parties can protect their financial positions
For married couples (or those planning to marry), nuptial agreements can set out how finances should be divided in the event of divorce.
For cohabiting couples, a cohabitation agreement is the best protection as well as clearly recorded ownership and details of contributions.
For both
- Keep good financial records;
- Communicate about financial expectations; and
- Get legal advice before major commitments.
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