Monumental changes to Family Law - Consultation process begins - what's changing and what could it mean for your family?

What is the purpose of the proposed reforms?

The purpose of the proposed reforms are to:

Prioritise fair outcomes for children
Protect the vulnerable
Provide a clear and accessible framework
Preserve the distinct status of marriage (which will not be the same as those who are divorcing when a marriage comes to an end).

What areas will it cover?

The government's consultation covers three areas of family law , which are in desperate need of reform:

Financial remedies on divorce
The proposals aim to provide greater certainty and consistency to address arguments that the current law is antiquated and out of date. The starting point for division of matrimonial property would be an equal division unless an unequal division was required to meet need. A methodical, three stage approach to needs is proposed, with the welfare of any children considered first, followed by the individual’s capital and income needs and finally any further discretionary needs where resources permit. The remedies available would remain the same as under the current law.
There are also proposals that pre and post nuptial agreements become legally binding where certain principles are complied with, at the moment, they are only persuasive.
Financial protection for cohabiting couples on separation.
The most significant change is the creation of a new legal framework that would give qualifying cohabitants the right to make financial claims when a relationship ends.
Inheritance rights for cohabiting couples.
The consultation will look at proposals to give qualifying cohabitants automatic rights under the intestacy rules (what happens when someone dies without a will). This change would mean that they would have the same rights as spouses and civil partners.

Will Pre-nuptial and post-nuptial agreements, become legally binding?

For married couples, or those who intend to marry, the consultation proposes making pre and post-nuptial agreements legally binding, providing greater certainty and clarity over a couples' financial circumstances, should their marriage breakdown.

Currently in England and Wales, pre and post-nuptial agreements are persuasive, if certain criteria have been followed, but are not legally binding.

This is a significant development for anyone considering marriage, particularly those with an imbalance financially, or children from previous relationships, who seek to protect their assets. If you are planning to marry and are interested in protecting your assets, now is a good time to take advice about a pre-nuptial agreement, even before the potential change in law.

As family lawyers we are already seeing, particularly between the months of January to June, an increase in instructions for pre-nuptial agreements. Many people are taking a more pragmatic approach to their finances when considering marriage.

The proposed introduction of qualifying nuptial agreements will follow the recommendations of the 2014 Law Commission report. At VWV we have been ensuring that our pre and post nuptial agreements meet the safeguards recommended by the Law Commission, currently, in the expectation that at some point they could be made binding. Although if pre and post nuptial agreement become legally binding, all and pre-nuptial agreements, signed prior to the change in law should be reviewed to ensure they comply with the law.

Why is the government consulting on cohabitation rights, and do they really need to change?

Resolution has for many years been lobbying the government for reforms to the law in respect of those who seek to cohabit, rather than marry. These overdue reforms are required to meet the needs of those in modern relationships, rather than more traditional relationships, who already have protection.

In 1996 there were around 1.5 million cohabiting couples. That increased by 144% to around 3.6 million in 2021 reflecting a huge change in family dynamics which the law has failed to keep pace with.

Currently unmarried couples living together have:

no automatic right to their partner’s assets if they separate
no automatic right to inherit if their partner dies without a will
limited financial remedies if the relationship breaks down.

This is regardless of how long they’ve been together or what they’ve contributed to the relationship (either financially or emotionally), subject to any agreement about how their relationship is to be conducted. The reforms are long overdue.

Will there be any qualifying principles for the new cohabitation rights to apply?

It is important to note that not every cohabiting couple would automatically qualify under the new proposals. It will only apply to couples who:

Have lived together for at least three years or live together and share a child together
Are in a “committed, romantic relationship.”
Are over 18 years of age.
Bring a financial claim within two-years of the end of the relationship.

Importantly, couples would be able to opt out of the framework if they both agree to do so, subject to appropriate safeguards. This must be treated with caution as those who are victims of coercive control, should not be forced to "opt out". This reflects the government’s intention to respect individual autonomy while ensuring that vulnerable partners, particularly survivors of domestic abuse, are not left unprotected.

How would the proposed changes effect cohabiting couples who own a home together?

Currently, disputes about property ownership between unmarried couples are reliant on property legislation - The Trusts of Land and Appointment of Trustees Act 1996 (TOLATA). This piece of legislation is utilised when a cohabiting relationship breaks down and one party invites the court to determine whether or not they have a beneficial interest in a property in the sole name of their partner and/or the extent of their beneficial interest in jointly owned property.

These proposals potentially provide a fresh approach to resolving disputes for cohabitees, avoiding the existing complicated, generally expensive and fiercely litigated TOLATA proceedings.

Under the new proposals, qualifying cohabitants will have access to a new, more flexible needs-based framework, alongside the existing law. They will be able to apply for property adjustment orders, (the same orders which are available for divorcing couples). This means a court could order the transfer, or sale of a property, or adjust the shares in which the property is held, based on the financial needs of the parties rather than it being based on the legal or beneficial ownership, as is the same for those bringing their marriage to an end.

This will not however bring TOLATA claims to an end. Cohabitees who do not meet the eligibility criteria, have not applied in time or who opted out - would still be able to bring claims under TOLATA.

It is hugely important therefore that you get legal advice at an early stage, so that, when the law changes, the correct route can be identified and followed.

If your partner dies without a Will, what difference will the new laws have on your rights to their estate?

Under the existing intestacy rules, an unmarried partner receives nothing automatically if their partner dies without writing a will, however long the relationship. The intestates estate will either pass to their blood relatives or go to the Crown. This can lead to the bereaved partner losing their home and facing considerable financial hardship.

Under the proposals, a qualifying cohabitant would receive the same automatic right to inherit as a spouse, if their partner dies intestate (without a Will), along with giving that partner the ability to administer the estate. The government is considering a five-year qualifying period to inherit (longer than the three years proposed for financial separation claims, which does seem unfair). However, if the couple have a child together, the qualifying period to inherit, would be removed entirely.

Giving qualifying bereaved partners automatic rights will remove the need for them to bring costly and difficult Inheritance Act claims against their late partner’s family.

However, this does mean that qualifying cohabiting partners will receive 100% of the first £322,000 of the estate in priority to the deceased's children. The unfairness this could create for the children of previous relationships and how that could be addressed will need to be considered as part of the consultation.

How will the new laws affect cohabiting couples with children?

Where the cohabiting couple have a child together or there is a dependent child of the family, they will be able to access the new legal framework upon separation regardless of the length of their relationship - the three year minimum duration which will apply to other cohabiting couples will not apply where there are children.

This reflects that having a child is a huge commitment, and that a parent who has sacrificed career progression or financial independence, to care for a child of the parties, deserves the requisite legal protection, and should not be significantly financially disadvantaged.

The child's needs will be the first consideration of the court, as they are when a couple divorces or dissolves their civil partnership.

Will cohabitees be treated the same as spouses and civil partners on divorce?

The proposed cohabitation framework is deliberately less generous than divorce, to ensure that the legal status of marriage remains distinct.

The most important differences are:

There is no sharing principle: When a marriage comes to an end, the presumption is that matrimonial assets should be shared equally. Under the proposals for the new cohabitation framework, there is no presumption of equality as the starting point. It is a needs-based adjustment, once ownership has been established.
It is clear that needs will be defined more narrowly, excluding discretionary needs and focusing on basic financial requirements. It is also anticipated that the shorter the relationship the smaller the award.
Access to the same remedies but not the same financial outcome.
Maintenance orders will only be available in exceptional circumstances, with the emphasis on a clean break. Those exceptional circumstances it is anticipated would be very hard to argue, but may be relevant if there has been physical domestic abuse perhaps, where one person is unable to work, because of the injuries they sustained during the relationship.
Opt-out available: Unmarried couples can agree to opt out of the framework entirely. Married couples cannot opt out of the court’s jurisdiction on divorce.

To conclude, marriage still carries significant advantages under the new framework.

What should you do if you are cohabiting right now?

It is important to recognise that these proposals are still at consultation stage. They may change based on the feedback from the consultation. The government has indicated that “finalised reforms will take place when parliamentary time allows.”

In the meantime, the law for cohabiting couples will continue to provide limited protection. Therefore it is vitally important to consider the following practical steps if you are cohabiting with a partner;

Prepare a cohabitation agreement. A legally drafted agreement, which sets out what happens in the relationship and afterwards in respect of property, finances and assets if the relationship ends.
Review how your property is held. If you own a home together, take advice on whether it should be held as joint tenants or tenants in common, and whether a declaration of trust is appropriate to record each person’s contributions, and the shares you each hold, which do not have to be equal.
If your relationship has already broken down, and you are unmarried and the property is in dispute, there are existing legal routes available to you, under TOLATA. Please do not delay take early advice now.
Make sure you prepare Wills, so that your partner and children are fully considered upon your death. A Will is the most effective way to ensure your wishes are carried out.