The aim of this Note is to outline what the Family Law (Scotland) Act 2006 (“the Act”) does about property rights for couples who are living together (“cohabiting”).
For people who are married, or for same-sex couples in civil partnerships, the law provides a fairly comprehensive scheme governing their mutual property rights. For couples simply living together (whether opposite sex or same sex) the law used to take a generally “hands off” approach and leave it up to such couples to make their own private arrangements about property matters. Quite often they made no such private arrangements. So, when the relationship ended, one or other party lost out and could feel badly done by: the law did not provide any property safety net for them. The Family Law (Scotland) Act 2006 has done something about that and introduced a scheme for regulating certain property matters between couples (both same and opposite sex) living together. This scheme does not go so far as it does for married couples and civil partners. But it goes considerably further than the law did before.
What is a “Cohabitant”?
The Act defines cohabitant so as to include both same sex and opposite sex cohabitants who are living together as if they were husband and wife or civil partners (as the case may be). In deciding whether a couple qualify as “cohabitants” – and so are entitled to the property rights the Act introduces the following factors count:
(a) the length of the period during which they have been living together (or lived together);
(b) the nature of their relationship during that period; and
(c) the nature and extent of any financial arrangements subsisting, or which subsisted, whilst living together.
It may be noted that (i) there is no minimum period of cohabitation before cohabitants may obtain their rights under the Act but (ii) the fact that a couple are in fact cohabiting does not in itself automatically mean they would be determined to be “cohabitants”. So, it might not always be absolutely clear when a couple would be entitled to the rights the Act confers. But in most cases it should be clear enough.
What are the Property Rights Conferred?
Rights in certain household goods
It is presumed that each cohabitant has a right to an equal share in “household goods” acquired (other than by way of inheritance or gift from a third party) during the period of cohabitation.
And “household goods” are, broadly speaking, any goods kept or used at any time during the cohabitation in any residence in which the cohabitants are (or were) cohabiting for their “joint domestic purposes”, excluding:
(b) shares or securities;
(c) any car, caravan or other road vehicle; or
(d) any domestic animal.
So, for example household furniture; a cooker; white goods; kitchen utensils; kitchen appliances; television; CD player, and radio would all be covered as being used for “joint domestic purposes”. But, e.g., a wrist watch or jewellery would not be included as these are not used for “joint domestic purposes”.
The presumption only applies to “household goods”: so it does not include the family home.
Rights in certain money and property
In terms of the old law, if an allowance was made by one cohabitant to another as a housekeeping allowance to be used by her or him for housekeeping purposes any savings made out of that money would nevertheless belong to the person who made the allowance. But the Act now provides that, unless the couple agree otherwise, money derived from an allowance made by either for joint household expenses is treated as belonging to the couple equally. Similarly if such savings were used to buy other property that would (generally) also be treated as owned equally.
Financial provision where cohabitation ends otherwise than by death
If the relationship comes to an end while both parties are still living then either can apply to court seeking a financial provision. But there is no comprehensive system of financial provision as there is for married couples. Put broadly a cohabitant may apply for a capital sum or for an allowance for a child of (both) the cohabitants. The court has to weigh up the “economic advantages” derived by the defender and the “economic disadvantages” suffered by the “applicant” during the relationship. “Economic advantages” and “economic disadvantages” are both defined in the Act but there is still quite a bit of room for the court’s discretion in the matter.
Any such application must be made no later than one year after the cohabitants cease to cohabit.
Application to court by survivor for provision where deceased cohabitant does not leave a Will
These rights arise only if the cohabitant who dies does not leave a Will (i.e. dies “intestate”). A cohabitant is free to make a will cutting out his or her cohabitant: the survivor would then have no rights in the deceased cohabitant’s estate on death.
In order for these rights to arise the couple must have been cohabiting immediately before the death: in other words a former cohabitant is to have no rights.
A surviving cohabitant may apply to the court for a capital sum or for the transfer to him or her of specific property from the deceased’s estate after payment of: any inheritance tax; any debts; and any succession rights which any surviving spouse (or civil partner) of the deceased cohabitant has in his or her estate.
So, if the deceased cohabitant died leaving a surviving spouse or civil partner as well as a surviving cohabitant the latter’s claim can only bite on whatever is left over after the “prior rights” and “legal rights” of the surviving spouse or civil partner are satisfied. So quite often in such a case the surviving cohabitant’s rights may be nil.
Any application must be made within six months of the death.
On the other hand in many cases there will be no surviving spouse or civil partner and here it should be noted that a surviving cohabitant’s claim is considered before any succession rights of the deceased’s children: although, any such children’s rights may be taken into account by the court in fixing any amount to be paid to the surviving cohabitant.
The matters which the court would take into account in fixing any amount due include:
(a) the size and nature of the deceased’s estate;
(b) any benefit received or to be received by the surviving cohabitant (e.g. life assurance proceeds);
(c) the nature and extent of any other rights against, or claims on, the deceased’s estate; and
(d) any other matter the court considers appropriate.
In short the court has a wide discretion in the matter so it is not possible to say in advance what any surviving cohabitant might actually receive. The advice must be to make a Will so as to avoid the application of these provisions.
Note: This material is for information purposes only and does not constitute any form of advice or recommendation by us. You should not rely upon it in making any decisions or taking or refraining from taking any action. If you would like us to advise you on any of the matters covered in this material, please contact Fiona Wayman: email@example.com