5 Mins
Celebrity news has been full of recent couple splits – Tommy Fury and Molly-Mae Hague and Sam Thompson and Zara McDermott to name just a few. These individuals are well known for their reality backgrounds, their glitz and glamour lifestyles, but they are also successful business people having built up personal brands and created often highly desirable products.
But what happens when the love bubble pops and the relationship ends?
First and best advice when separating from your cohabitant in Scotland is to ensure that you are receiving full and proper advice as to the process of separating and your rights. This can take the form of a solicitor to advise you on family law matters and a financial advisor to advise you on how best to future manage any settlement you receive. If you or your ex owned a business or set up a business during the course of your cohabitation, the instruction of a forensic accountant would be a worthwhile step to take.
What can a family lawyer help me with?
A family lawyer will be able to provide you with detailed advice on your rights as a cohabitant and on the relationship breakdown.
Firstly, it is a common misconception that ‘common law marriage’ exists in Scotland – it does not. If there is no marriage certificate or proof of a civil partnership, couples living together as husband and wife are considered cohabitants. This is even the case if you own property jointly, have shared assets and/or have children together.
The rights of cohabitants vary significantly from those of spouses or civil partners so it is important advice is sought early on to manage expectations and move forward positively and pragmatically.
For cohabitants, there is no ‘matrimonial pot’ of assets to be divided on separation. There is no right to share in assets of the other built up during the relationship. Instead, each party simply keeps what they have.
In certain circumstances, however, one partner can make a financial claim against the other. Such a claim can be made if a partner has derived economic advantage from the contributions made by the other, or if a partner has suffered economic disadvantage in the interests of their partner or a child. The claim must be made within 12 months from the date of separation. After expiry of that period, no claim can be made in any circumstances.
A family lawyer can advise you on negotiating a financial settlement and documenting that in a ‘full and final’ separation agreement. Ancillary advice can be tendered on matters surrounding occupancy rights of the family home and discussion on the importance of putting a valid will and power of attorney in place.
If there are any children of the relationship, a family lawyer can give advice on matters such as the child’s place of residence, contact arrangements and child maintenance.
What can a forensic accountant help me with?
In a cohabitation claim, a forensic accountant could be instructed to value a business at the start of a cohabitation period and then at the end of the cohabitation period. This would show any change in the value of the Company during the cohabitation period.
As well as valuations, a forensic accountant may also be able assist by commenting on the current resources of the parties, commenting on share and asset transfers to provide a history of a business during the course of cohabitations and considering the source of funds used to buy or set up businesses during the course of the cohabitation.
For forensic accountants to provide a useful insight into the valuation of, or increase in value of, a business, they will need to be provided with relevant financial documentation. This would include the company’s financial statements for the three years ending before the period of cohabitation as well as a minimum of three years financial statements up to the date the cohabitation ended. Details on any dividends paid or transactions through a director’s loan account over the period of cohabitation are also useful in assessing any change in value.
For forensics accountants, there isn’t much difference between cohabitation claims and matrimonial actions, which varies vastly to the legal position. Whether we are valuing businesses for spouses, civil partners or at the end of a period of cohabitation, our approach would be the same.
Reconciliation?
For Molly and Tommy there is a suggestion that a reconciliation may on the cards. If that’s the case – and they decided to relocate up to Scotland – best advice would be for them to enter into a cohabitation agreement. The difficult and acrimonious situations in which separating cohabitants find themselves can be prevented or managed by entering into such a legal agreement. Ideally this should be done before the commencement of cohabitation, but it is not too late to do so afterwards.
Such an agreement can regulate what is to happen in the event the relationship breaks down, with a clear formula to calculate how much each party will receive and also what should happen on the death of one party. It is more sensible to retain control over what is to happen upon a certain event happening in the future, rather relying upon the current legislation which can often lead to an unsatisfactory outcome. Moreover, the cost of entering into a cohabitation agreement is far more modest than the cost of being involved in lengthy court proceedings.
Rowena Eves is an Assistant Manager in the Forensics Accountancy team in Edinburgh.
Kate Bradbury is an Associate in the Family Law Team at Brodies LLP, based in Edinburgh.
All legal references were written by Kate Bradbury, an Associate in the Family Law Team at Brodies LLP, based in Edinburgh.