cohabitation

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How does cohabitation affect divorce settlement

Stranger on the shore: the significance of the cohabitee

 

How does cohabitation affect divorce settlement?  How does it affect my imminent divorce or the payment of spousal maintenance payments?  The vexed questions surrounding cohabitation usually cause a bulge in my virtual postbag.  The common scenario is as follows: there is a divorce and one spouse pays maintenance to the other.  The spouse paying the maintenance moves in with a new partner, often with a new family.  The new family struggles financially, and the ex-wife refuses to settle for reduced payments.  Years after the divorce, resentment festers on both sides, often crystalising about this time of the year when one ex seems to be able to go on a ‘swanky foreign holiday’ whilst the other contemplates a day trip to Butlins with packed lunches all round.

I think it is difficult enough for ex-spouses trying to get on with one another in a post-divorce world with the difficult issue of the maintenance order that goes on and on (and on).  But at least there is resolution of a sort for those who have dissolved their marriages and been given their financial orders.  So spare a thought for those whose divorce or financial proceedings appear to have dragged on for years, outliving Government administrations and Take That comeback tours. How can you plan a life with a new partner when the legal obligations for your previous spouse (and the children you’ve had together) have not been put to bed?

To the postbag…

Sinead contacted me recently and this is her query:

I have read your blogs on co-habitation after a divorce where the person recieving maintenance etc has gone on to live/marry etc and how this affects the level of maintenance paid. How does it work the other way round?

My partner (of 7 years), separated 71/2 years ago, divorced almost 2 years ago is currently going through the throws of financial settlement. He has 2 adult children and a 10yr old. The 10yr old currently lives with his ex wife in the old family home. He has continued to pay the mortgage/endowments on the family home and cleared many joint debts throughout this period (equates to about 75,000 to date). He was retired from the army 2 years ago with a pension and lump sum. He has not had work since. The lump sum has now all gone (living costs and paying debts etc mentioned above) and his monthly income does not cover his outgoings if he continues to pay the mortgage etc on the family home. As a consequence I am now supporting him (and as such payments to his ex wife!) – I am on a reasonable salary, almost paid off the mortgage on my house and have substantial savings (I had the misfortune of losing both parents and inheriting as well as having saved my whole working life) I have 3 children of my own that I support independently from my partner.

Will this have any influence on the likely award to the ex wife? (with her salary and benefits she brings home about the same as my partner) or will his financial status be looked at independently?

How does cohabitation affect divorce settlement?

Well, the first thing I should say is that it is always difficult in matrimonial settlement cases to isolate maintenance claims from capital claims.  Each marital settlement needs to be viewed as a whole. The existence of a new relationship, especially one of cohabitation is a fraught issue.  The cohabitant is not one of the legal parties to the divorce but their presence, like that distant stranger on the shore, is hard to ignore.   I have been critical of the way in which the courts presently deal with committed cohabitation where the receiver of maintenance (after a divorce has been granted and a financial order given) is able to pool resources with a new partner and still receive substantial maintenance from their ex.    But Sinead’s case deals with a situation where the financial settlement has not been achieved and there is no financial order yet.    With this thought in mind I can offer the following observations:

    • Sinead’s partner was divorced 2 years ago (by which, I assume, a Decree Absolute was granted by the court dissolving the marriage).  This is before there has been a financial settlement, either a consent order or an order given by a judge in the absence of agreement.  This is unusual.  If lawyers are involved, in most cases, they will agree not to apply for Decree Absolute until the court has given a final order dealing with finances.  However, the prejudice, if there is one, would likely be to the ex-wife in this situation as she will automatically lose the right to widow’s benefit and possibly certain dependent’s benefits under the Army pension in the event of Sinead’s partner dying before the financial settlement is agreed.
    • what about pension sharing orders? Even though this army pension is in payment it can still be subject to a pension sharing order.  Expert advice is required (normally from financial advisers instructed by lawyers) as the valuation of armed forces pensions, like police pensions, is not straightforward.
    •  Sinead’s partner has retired from the army.  He took a lump sum but has expended this over the course of the last 2 years in meeting income needs (probably both his own and also his ex-wife’s).  Generally speaking, it is never a good idea to meet income needs out of capital.  Sinead’s partner will no longer have this capital cushion.  I do not know if he has any other savings.  But now the capital has gone, and since I am told he has not worked since retirement, how can he maintain the payments made to the ex-wife, especially the mortgage payments on the former matrimonial home?  Sinead cannot be expected, and legally, certainly is not required, to subsidise her partner’s ex-wife.  But if things carry on as they are, this is effectively what she will end up doing.
    • What about the former matrimonial home? I am presuming it is jointly owned by Sinead’s partner and his ex-wife. It would appear there were 3 children of the marriage but only one of them, a 10 year old, still resides at the property.  Is the size of the property surplus to the needs of the ex-wife and child?  Could they downsize and do so now before the child enters the early years of secondary education when a move could impact upon educational attainment?  Would there be sufficient equity following a sale to allow the ex-wife to purchase a new property free of mortgage charge, or with a much reduced mortgage, that would place less reliance upon the ex-husband’s income (which must come from his pension payments).  If there are lawyers involved in this case, I suspect that they will identify the potential sale or retention of the family home as key in this case.  But to let the situation drift on as it has been doing helps nobody here.
    • I do not know the length of this marriage or the ages of Sinead’s partner and his ex-wife.  Judging by the age of the children I deduce that it is a ‘long’ marriage. This can dictate the length of any spousal maintenance claims.  So, it may be more likely that this could be a joint lives spousal maintenance claim.  That is, Sinead’s partner may have to pay spousal maintenance to his ex-wife until he dies, she dies, she remarries, or the court relieves him of the liability by a further court order.  There may be an argument that the ex-wife should not receive any spousal maintenance at all if the incomes of ex-wife and ex-husband are roughly similar.  However, I would imagine that a court would expect at least nominal maintenance to be paid to the ex-wife because there is still a minor child of the marriage residing with the ex-wife.
    • I should also mention that I do not know which area of England & Wales the ex-wife lives in.  Two courts, 100 miles apart, can produce significantly different outcomes based on the same set of facts.   Talking to family lawyers from different parts of the country, it is clear that some courts seem content to award spousal maintenance for short periods of time after divorce whilst others insist upon joint lives orders.  I would not say there is a North/South divide on this issue but it is clear that there are regional disparities (even though the law is the same!)
    • It is interesting to note the long period of separation without a financial settlement (sealed by a court order) being put in place.  This long delay almost invariably makes it harder to reach agreement.  For instance, Sinead’s partner has been paying for the mortgage and endowments on the former matrimonial home.  His lawyer may say that if these monies have come out of his pension capital then he should ask for a credit for those payments (say 50%) to be taken account of in the financial settlement.  This argument would be based on the fact that he had increased the value of the capital assets of the marriage (the home and the associated endowment policies) by depleting his own capital (from his pension lump sum).  But the devil is always in the detail.  The ex-wife’s lawyers may argue that the mortgage  and endowment payments were in lieu of the proper spousal maintenance and proper child maintenance that should have been paid to the ex-wife and children over the 7.5 years of separation.  And, for all I know, the mortgage may be an interest-only mortgage which does not reduce the amount of capital borrowed over the term of repayment.  So it’s fingers crossed, that the endowment policy will be substantial enough at the point of maturity to pay off the outstanding mortgage sum.
    • If the capital assets of the marriage are modest and the income of the parties is also modest, then this may be characterised as a needs case.  That is,  there may not be enough capital within the marriage, to meet the housing needs of the ex-wife and Sinead’s partner.  The ex-wife may argue that she needs more than 50% of the capital in the home (once the mortgage is paid off) because the housing needs of the 10 year old child will be resting on her shoulders. (And the court will give first consideration to the needs of any minor children of the marriage).
    • The complication in these circumstances is that Sinead’s partner has been cohabiting with Sinead for a significant period of years.  The fact of cohabitation with a new partner by one spouse is taken into account by the court and I think the weight that may be attached by a court to this cohabitation will work itself out along the following lines:
      • Is the new partner a potential income or capital resource?  In this case Sinead has built up her own capital by dint of hard work and has also inherited capital from her parents’ estates.  Sinead receives a good wage.  She has in effect subsidised the ability of her partner to continue the payments to the ex-wife.  If Sinead was in a position of having no capital, living in a rented property with her partner, and entirely dependent upon benefits, then we may safely say she would be an added responsibility for her partner rather than a capital or income resource for her partner.
      • Even if the new partner does have capital and income resources, is there a competing demand upon the new partner’s resources that should effectively cancel out the resources?  In Sinead’s case, yes, she has three children of her own and they unarguably would have first call upon her resources.
      • How long and how committed does the cohabitation appear to be?  A few years of on/off cohabitation is not going to really impact upon any court’s consideration in a divorce financial settlement.  But Sinead’s case is somewhat different.  There appears to be some 7 years of cohabitation.  A court may think that is a fairly settled situation.  Perhaps a court may think it could give more of the capital in the matrimonial home to the  ex-wife because the husband’s housing needs have been addressed by living with Sinead.  The reality, of course, is that Sinead could ask her partner to leave her house the day after any such divorce settlement was agreed.  He has no security of tenure in Sinead’s property (on the information provided by Sinead).  So, he does still have housing needs and some entitlement to the capital in the former matrimonial home.
      • Is it likely that Sinead and her partner will marry?  Any such intention would have to be declared by Sinead’s partner at the point of submitting a financial consent order (presuming there is an agreement) to the court for approval.  If marriage is likely, then Sinead will appear to the court to represent a more solid capital and income resource for her partner and the ex-wife will probably seek more of the capital in those circumstances.

Sinead will probably want to keep her capital savings separate from her new partner until (and even after) his financial settlement is resolved.  She will not be thinking of giving her partner a share in her own property.  After all, she has her own children to think about and prioritise.   She may well be asked by the ex-wife’s solicitors (via a request to her partner) to give disclosure of her financial means so they can gauge whether she really does represent a resource that should be taken into account.  Sinead does not have to provide detailed disclosure but may consent to provide a headline figure for her net income and her net capital.  It would be prudent, however, to state that Sinead does have three children to maintain with her income and there is no legal obligation upon her whatsoever to support her partner or, indirectly, his ex-wife.

Sinead may, if she sought legal advice, be told to have a cohabitation agreement with her new partner or, if she plans to marry him in due course, to have a pre-nuptial agreement.  So the answer to the question: “How does cohabitation affect divorce settlement?” is “It depends on the facts in each case”.

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Fairness, like beauty, is in the eye of the beholder.  Both were in short supply on the occasion I represented a client at a Financial Dispute Resolution (FDR) hearing in an outer London county court whose architect had taken to heart the brutalist aesthetic of the early 1970’s.  My client had divorced his wife some 10 years previously and had been paying her maintenance ever since.  In the original court hearing my client had claimed that his wife was in a relationship of cohabitation with her new partner.  The wife vehemently denied this, my client’s lawyers had said it was a kite that would barely fly and so the case settled on the first day of the trial.

Fast forward to my involvement after the husband discovers that his ex-wife is shacked up with another man and they were happily settled in another jurisdiction.  My client didn’t care in the slightest about the relationship in itself but further investigation revealed that, surprise, surprise, the new man was in fact the same man about whom the husband had harboured suspicions a decade earlier. This new man was working.  Why, therefore, my client asked, should he carry on paying maintenance for his ex-wife when this spousal maintenance was directly contributing to the living standards of a man quite capable of earning his own living?

This was a case in which the children were grown up and quite independent of the former spouses.

My attempts to invite voluntary financial disclosure from the ex-wife with a view to negotiating a cessation or downwards variation of maintenance met with little success.  My client therefore had to issue variation proceedings (Matrimonial Causes Act, 1973, section 31) asking the court to either terminate his spousal maintenance payments or at least to reduce them.

The ex-wife made two attempts at producing her Form E but the contents were evasive to say the least. Eventually, I was able to obtain an admission that she had cohabited with her new partner for the past seven years.  It was clear that she had gone to considerable lengths to conceal the fact of the co-habitation from my client.  Legally, there was no reason for her to do so as the original court order from ten years ago, awarding her spousal maintenance, had not stipulated that the payments should end or be reduced in the event of her cohabitation with a new partner.

The proceedings were settled at the FDR with the wife agreeing a reduction in her spousal maintenance.  The judge, whose role at the FDR is to assist the parties to reach compromise and avoid the lottery and costs of a trial, was not required to reach any conclusions (what lawyers would call a finding of fact) about whether the former wife had deliberately attempted to conceal her co-habitation from my client, or whether she had attempted to mislead me, my client and the court by filing inadequate Forms E before making a late admission that she had, indeed, been cohabiting.  The judge was unwilling to comment adversely upon these matters and criticise the wife.  My client was not willing to incur the further expense of going to trial so that is why a deal was struck.

I had to explain to my client that if his ex-wife had married her new man, then the spousal maintenance payments would end automatically.  But shacking up was different.  The English family court does not regard a relationship of cohabitation as having the same gravity as one of marriage.  So, the logic goes, my client’s obligations to his ex-wife arising out of his marriage, were of such significance that they could not be displaced by the ‘inferior’ relationship of mere cohabitation entered into by his ex-wife.  He must continue to pay maintenance, enriching the joint financial position of his former wife and her new (working) partner.

I wondered if the ex-wife would appreciate that her relationship of seven years (I suspect closer to ten years) was inferior to the relationship of marriage she had formerly enjoyed with my client.  I wondered if any cohabitees, the length and breadth of this jurisdiction, would appreciate the second-class nature of their relationships compared to their married counterparts.

Why then was the ex-wife so intent on concealing her new relationship when there was nothing in the original court order that would prevent her co-habiting and losing her spousal maintenance?  I think the answer is that she knew, instinctively, morally if you will, that it was wrong to continue receiving the maintenance when she was in a new and settled relationship.  That is why she concealed her partner.  I think this judicial attitude towards co-habitation has to change.  I consider it is out of step with how a significant proportion of the English population choose to lead their lives.   The Matrimonial Causes Act 1973 belongs to, well… 1973 and brutalist architecture.  Society has moved on since then.  Forty per cent of all children in this jurisdiction are born to unmarried couples.

I had hoped that Parliament would revisit the rights of cohabitants and in so doing, enable cohabitants to seek financial relief from each other in certain circumstances.   This would then open the way for ex-spouses to be relieved of their financial maintenance obligations when their ex was in a settled relationship of cohabitation with a new partner.  Unfortunately, the recommendations of the 2007 Law Commission Consultation Paper suggesting legal rights and remedies as between cohabitants was quietly shelved by the Government last week.  That is a spineless and neglectful decision.  Previous administrations have at least had the courage to wait until the Daily Mail ran an adverse editorial before running for the hills.  The present Government, whose earlier decision to take the axe to public funding for most family law cases, is hardly covering itself in progressive, legislative glory.

 

 

 

 

 

 

 

 

 

 

 

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