Agreements between Couples

What are the concerns? 

A written agreement can cover the hopefully unlikely events of separation, death, or incapacity. This note relates to cohabiting couple where the contribution to a property being bought together is unequal.

As with most legal matters there are a few issues that arise, and these contribute to the length of this note.

McVey and Murricane want to do our best to ensure that the drafting of the agreement is as straightforward as possible whilst at the same time ensuring that the document meets all regulatory and other requirements.

The reason for the Agreement

When a married couple separate the law states that they should each receive a reasonable share of the matrimonial property (that consists of the assets that have accrued during the marriage).

In most cases reasonable means equal.

When a cohabiting couple separate, they both have a potential claim, but it is not based on any assets that have been acquired. It is related to any financial advantage or disadvantage that either of the parties may have gained or suffered during the period they were living together.

That might sound complicated and in practice it can cause uncertainty. It is an area of the law being considered for amendment.

You will have told us that you are not contributing the same amount of money to the deposit for the property. You both want to make sure that in the unfortunate event of your separation (or either of your deaths or incapacity) there is no doubt as to what is to happen to the property. Will the property be sold? How will the sale proceeds be divided? Will the property be transferred from one of you to the other?

The purpose of any agreement is to ensure that there can be no disagreement about what is to happen as it is all noted in a legally binding document.

What kind of Agreement do you require?

It is likely that you only wanted a written Agreement to cover the fact that there has been an unequal deposit. In Scotland, however, there are laws relating to the finances of couples who live together. If a couple are living together as man and wife, they are regarded by the law as Cohabiting. Old fashioned and not the terminology of our times but that is the legal term that is used.

Couples who have been Cohabiting or intend to Cohabit are often unaware that there are possible financial claims that one of them might have against the other in the event of their separation. It is outside the general scope of this note to explain what these rights are although they are quite different from the claims a married couple who are separating may have on divorce.

Some Cohabitating couples are happy for these rights to remain, others would prefer that an Agreement be prepared that does away with these rights. This means there are two distinct types of Agreement. We call the first type of Agreement, which only deals with the deposit, a 'Restricted Agreement'.

The second type of Agreement which involves the wider financial implications of living together is called a 'Cohabitation Agreement'

The following table deals with the differences between the two types of agreements. The fact that something is allowed in one and not the other is due to regulatory issues.

Under MMiProtect a Will for both of you, provided it is straightforward, can be prepared for £89.99 for each Will. If it is complex, then it will be more expensive. A Power of Attorney is more expensive because of the charges made by the Public Guardian's office. Each Power of Attorney costs £84 (including VAT) but the charge by the Scottish Government is £81 for registering each Power of Attorney.

There are many other benefits to having a Will and a Power of Attorney, but the aim of this note is to provide you with a like for like comparison between the two methods.

So, in summary your choices are:

1. A Restricted Agreement
2. A Restricted Agreement with a Will for both of you
3. A Restricted Agreement with a Will and Power of Attorney for both of you
4. A Cohabitation Agreement which can cover death and incapacity but only in relation to the property
5. A Cohabitation Agreement which can cover death and incapacity but only in relation to the property with a Will for both of you
6. A Cohabitation Agreement which can cover death and incapacity but only in relation to the property with a Will and Power of Attorney for both of you

It is appreciated this should not be so complex, but we are hamstrung by many regulations that are out of date and not useful in the modern way of life. But they are the Law which means these choices are necessary.

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