The ESPC Property Show: Marital Status and Property Rights

Paul: Hello, welcome to the ESPC show as ever. It's Paul
Megan: and it's Megan. Today we are going to have a quick intro and we don't want to spend too long introducing our guests because they've got a lot to say and it's really interesting and valuable. So, um, we had Dianne and Kimberley on, from Watermans, to speak all about marital status, so buying unmarried and, but also the opposite end of...
Separation, divorce, and what happens with your property. So yeah, quite a big topic.
Paul: It's incredibly informative though.
Megan: Yes, it really is.
Paul: We learned so much in this episode. And there's bits of it that you're probably thinking, ah, do we want to face up to these things? Death, divorce, all these other things, but it's so valuable.
And as I say, we didn't realize the amount of people out there haven't got will. You find out why you should. Lots of things to cover. It's definitely worth a listen.
Megan: Yeah. So without further ado, here's our chat now.
Paul: Today we are joined by Dianne and Kimberley from Watermans and we'll get you to introduce yourself in a moment.
Then the questions might get slightly harder but not too hard. And we're gonna have a good show today. We're just gonna have a chat and we're gonna chat about...
Megan: Yes, we're going to chat about all about how marital status can affect you during your property journey, but I will leave the intricacies of that to the experts.
Yeah, so I don't know if we just want to kick off. Diane Kimberley, do you want to introduce yourselves?
Dianne: Yes, thank you. My name is Diane Millen. I'm the head of family law at Leith.
Kimberley: I'm Kimberely McKay and I'm head of private client. For those who don't know, private client covers wills, trusts, executories and powers of attorney.
Paul: Brilliant, and that plays a bit of a part in some of the answers today, doesn't it? I'm spoiling it already. We're going to get into it. Shall we just start? We'll just get into the question time. We'll see how we play out from there.
Megan: Yeah, so I think, the reason that we were interested in chatting to you guys was that there's a lot more people getting onto the property ladder in an unmarried couple.
That might be friends, um, bound together, siblings, or romantic partners. But, we just wanted to ask, first of all, what, how are you seeing that? How frequently do you see unmarried couples purchasing together ?
Dianne: Yeah, I think in line with what we know about society generally, and see around us, there are more and more cohabiting couples coming in and wanting to purchase property together.
And from my point of view in the law, there would be a difference between two siblings or two friends or flatmates buying together and two people that are in a romantic relationship. And that could be of any kind or any configuration of people or anything like that. But it's that intention to live together as if you were partners or spouses that makes a difference in law.
Paul: I suppose then just thinking about that, then you are at that point when, um, you think we're going to buy, um, be it in a relationship or even friends, as you say, I think just with the financial situation, we know friends are buying. What should people be thinking about before buying a home together then?
Dianne: From my side of the house, it's really about the investment that you make in that property and who's taking on the debt by way of the mortgage. Because if one of you is putting in a bit more than the other, which isn't unusual, depending on what's happened in life up till then, or even if somebody's parents are kicking in a bit, which we see quite a lot, as you can imagine, then people might assume that if things go wrong further down the line, then they'll just be able to get their money back out of the property.
But that's not always as simple as we'd like it to be. And long story short. Often the best way to deal with that is to set out everything in an agreement before you actually complete on your purchase so that everybody knows if things come to an end, then, you know, this is what will happen to that investment and how that will be dealt with.
Um, so that gives everybody clarity from, from the get go. If you don't have that, and I also am consulted by people who are at the other end of that process and they're splitting up. And, Without going into a lot of technicalities, it is not always straight forward to get your deposit back in those circumstances.
Certainly not without going to court, which is not, and nobody wants to have to do that. So, I suppose the takeaway is, if you are looking to purchase with a partner in particular, and you're putting in different amounts or even only taking the mortgage in one of your names, for example, You need to have a chat about looking ahead to what you might need to do.
Paul: Even though we know that, you know, the chance or it won't happen. But it is a horrible prospect. You've just got together. You're buying everything . Well, what if it all falls apart? But as you say, there's really good reasons for doing that. Is that a legal agreement? Is it just a letter you both sign? What is that?
Dianne: It's best if it's drawn up by a solicitor and we can only act for one person in the couple because the other person ought to get their own advice from somebody who's independent of them. And I know it's not the most romantic thing. I am the romance killer in the office, there's no doubt about that. The agreement needs to be tailored to each individual couple, but there are certain things they should all cover. The difficulty is if you just email each other or you, you have a verbal agreement even being able to prove that later on is going to be a difficulty and potentially that might not be enforced if there was a challenge to it, whereas if we do that properly and get it set out for you.
My hope for all my clients is it just gets stuck in a drawer and they never have to see it again, but if they do, it's there.
Megan: You mentioned about, the prospect of somebody putting in, The deposit and the mortgage being in one person's name, but potentially, you know, the couple are both splitting the cost of the mortgage. What can happen in that situation?
Dianne: That's a bit more of a wet towel around the head job for me, to be honest. Usually if you are...
Paul: You've got a lovely turn of phrase.
Dianne: I mean, I like doing it, don't get me wrong, but it's a bit more challenging because usually then only one person will be taking the title.
And if you're putting in... Thousands of pounds of your own savings and you're not taking any title, you're really in a vulnerable position legally then.
Paul: Title being that you can't evidence that you actually have an ownership in?
Dianne: That's right, that you don't have a share of the ownership of the property, and people don't necessarily understand the implications of that.
And an agreement like the one I'm describing won't change that, it doesn't give you ownership of the property, but it will give you some certainty about getting your money back at the end of that relationship if that happens.
Kimberley: I'll cover perhaps the more morbid side of this, which is another really important thing to think about when you're purchasing a property, which is to make sure that you've got a will in place.
And that goes for single people and married couples and unmarried couples and other people who are buying together who are not in a relationship. The important thing is that you, you do think about worst case scenario when you think, if something happened to my partner, can I afford to keep living in this property and continue making the payments?
And is that going to work out? And, It's one of the areas that people tend to ignore because it's not nice to think about it. You don't want to have to think about yourself dying or your partner dying. But the reality, if you don't plan for it, can be quite brutal. so that's one of the things we definitely recommend.
And at the same time, we usually recommend people have a power of attorney in place. just in the event that their, them or their partner isn't able to make decisions for themselves. That's what power of attorney does. And it means that the other person can continue to make sure that the property is being looked after and the payments are being made on behalf of that person who can't do that.
so the will and power of attorney are quite well put together to be done at the same time, but, the rights of, of married couples and unmarried couples in terms of inheritance, are very, very different. So it's, it's so, so important, particularly for, for unmarried couples, because there's no automatic right in law.
So, if you're married and one person dies, then there are automatic rights of the spouse. There's no such thing for unmarried couples, and it does require a court action within six months, whereby you might get something that you think's appropriate, but you might not because a sheriff ultimately will decide what's appropriate.
So the safest thing for yourself and for your partner is just to get a will done - plan for the worst and hope for the best.
Paul: Sure, no, well put, and as I say, I think it's almost like a pension, it's something you never really think about until you get nearer the time when, as you say, go early on these things, isn't it?
Yeah. At first I might sit down and sort of, I mean, Yeah, I was gonna ask you if you've got a will, Megan. You can ask me. I have, and I think it's about keeping it up to date as well isn't it really?
Kimberley: Absolutely. We usually recommend a will review every five years, or if you've had a change in circumstances.
If you're unmarried and you then marry, that's not a reason to change your will, but you should definitely review it. divorce is absolutely a trigger for a new will.
Paul: Have you ever had a scenario where somebody hadn't updated and things had changed and suddenly the wishes, can that be appealed against or is it, sorry, it's in black and white, that was...
Kimberley: Um, generally not. There are, there are rights of spouses, it's called prior rights and legal rights. So there are certain people being spouses and children who can make a claim on a person's estate, but it's only on the movable estate, which does not include property. So if you, for example, had a will in which you said, I leave my property to the cat and dog home, and you've left your spouse out.
There's nothing they can do about the property side of it. Perhaps on the cash side, but not the property. So, a will is an absolute way to ensure that the person you want to inherit your property, or you're sharing the property, can do so. And it cannot be challenged. It can be challenged actually. I shouldn't say that, but it can't be challenged because you feel like you've been left out.
Dianne: And I think that's another important point in relation to divorce, because I will normally say when I meet a new client who's divorcing or indeed separating, but primarily divorcing. You should speak to my colleague about your will because a lot of people have got wills leaving everything to their spice and vice versa and the divorce process can take a bit longer than people imagine and if something happens to you over that period of time, your existing will would still be relevant, it wouldn't automatically terminate until you divorce.
You don't, most people in that position don't want their spouse to inherit because they are separating but the only way to rectify that is to make a will. A lot of people will say, I want to get to the end of this process before I think about that. And I can totally understand that, but it doesn't actually protect them over that period of time.
And that can have very serious consequences.
Paul: Absolutely. Wow.
Dianne: Okay.
Megan: So I guess that kind of moves us on to the kind of separation side of law, not the happiest subject matter, as you mentioned, but in terms of if people are getting married, um, we were just chatting before about prenuptial agreements. I wasn't 100 percent sure what the legalities were around that in Scotland.
How legally binding are they?
Paul: Does It only work in LA? And if you're a Hollywood film star?
Dianne: That's the thing, everyone thinks prenups are for the rich and famous, but they're not actually. They're for anybody who's got any significant assets before they get married. And it's quite different between Scotland and England as well.
English prenups are like the phone directory, they've got a lot in them. And in Scotland they're a bit more restricted, but they are absolutely valid and I would expect a court to enforce them. And really the main purpose for most of the prenups I deal with is that someone's coming into the marriage with significant assets.
They may have inherited them from the family or they may have acquired them before the marriage, especially if it's a second marriage. And if you're, you get married and those assets just sit there and you don't do anything with them ever, then they're not part of the pot if you split up and need to be shared.
But that's not how real life works because people will sell the property and buy another one, they'll cash in shares or they'll use money in a bank account to buy things. And the more your pre marital money gets mixed in with the joint money, the harder it is to set that aside if you do divorce. And usually the purpose of a prenup is really to ring fence those assets and they're off the table, generally speaking.
So if you were subsequently to divorce, the agreement says they will not have a claim on X, Y and Z that you came into the marriage with. And mostly people will agree that that's fair and reasonable for each other. It applies to both parties, so both people can protect the assets they're bringing in. If you don't have one, it doesn't mean that you can't try to make that argument, that those should be excluded, but you're then putting yourself on the mercy of the court, and as Kimberley said, that's not a good place to be.
Paul: Sure, and same rules apply, independent advice, both people need to sign it, is that how it works?
Dianne: Yes, and that's actually critical to the question you asked about enforceability, and that's why we would always want, um, our clients spouse or spouse to be to take their own independent legal advice. And indeed, I act for people in that position referred by other solicitors, because that means they know what they're signing.
They understand what it means. They can't then say that it was sort of put under their nose in the morning of the wedding. And if you don't sign it, then it's all off. And in fact, the length of time you've got to consider it is also part of the enforceability of it. So getting that organized in good time before the wedding, having time to take independent advice.
And the person fully understanding and not feeling pressured are all part of the picture in terms of being able to rely on it later.
Paul: I'm just picturing that, you know, after you've been married, you sign the thing. And then, oh, whilst you're here, can you just sign this as well?
Dianne: No, absolutely. And actually, if you'd missed the deadline, you can do it after you're married, because we would just call it a postnuptial agreement.
Paul: Sort of kills the mood a bit , I would imagine.
Dianne: Yeah, but the problem with that is you've kind of lost your leverage, if I can put it that way, if you're the person with the assets. But I have had clients who have just... For whatever reason, not being able to get things over the line in time and have come back and negotiated it afterwards.
And there's no legal reason why you couldn't do that.
Megan: And is it something that a lot of people get? Do a lot of people get prenuptial agreements?
Dianne: I am seeing more of them than I used to even a couple of years ago. And I think that's because knowledge is spreading. Just that people see it in celebrity news and so on and think about it.
And you do get a lot of inquiries about it. Doing the actual posing up is quite a, it's a reasonable undertaking in terms of the document and the complexity. What sometimes worries people is that, you know, if they put that in front of their, the intended spouse, how are they going to react, how are they going to feel about it, because it does feel very mercenary, it does feel quite uncomfortable.
And sometimes it's helpful for people to be able to blame the lawyer, in a way, and say, you know, my lawyer told me that I had to have this conversation with you.
Paul: And would you say that, that's a really good point that you're making there, and is that saying we think a prenup in this case would be valid, I mean, as you say, not that they're blaming you, but you, You would be pointing these things out, would you?
Dianne: Yeah, for me, it's about saying this will give you some clarity and certainty about what will happen in the future. And certainly if your client is the person who has assets to protect, then you have to say, without this, there's some risk that those might, you might lose those in the divorce or part of their value anyway.
And usually when those assets come from the family, there's a particular, um, But people particularly want to hang on to them. Also, if you have children from a first marriage, you are more likely to want to protect those assets so that they can pass to their children, which is something that, that Kimberley would do.
And so a succession review is part of what we would do in that situation.
Kimberley: I think one of the things that's probably rings true for both of our lines of work is that a lot of clients think that they're not rich enough to have a prenup. And they think that it's for the rich and famous. And a lot of people will say to me, I don't have anything to put in a will.
And I'll say, do you own a house? And they say, yeah. I'm like, there you go then. Um, you, you absolutely have a very valuable asset that needs to be protected.
Paul: And pensions and things like that, death in service, that sort of thing?
Kimberley: Pensions generally fall out with the estate, um, and don't, don't tend to be dealt with in terms of the will, but not necessarily.
So that's something that we do as part of the will process, is that we make sure that you've got all of your ducks in a row with all of the things that might be required or might become valid on, on your death.
Dianne: And I think one of the other, I, I agree with that. One of the other things people think is that it, it should all be relatively simple.
You know, you can sort of write a letter and that will dispose of all of these issues. And when you say actually it's going to be an agreement and this is how much it's going to cost and there's, there's a lot of moving parts to it that can be a little bit off putting, but it's just what you have to do to make sure that your wishes are followed, whether that's.
I'm not sure if it's in separation or whether it's on death and there's a reason that we have to put it in that way. And you know, once you've done that, you've done it and you don't have to keep going back to it in the case of a prenuptial agreement. Although if things change, for example, if you leave the country or if you have children or you acquire other substantial assets through inheritance, you might want to review a prenup just as you might review a will.
But I mean, it has to be done a certain way for it to work and we just have to accept that, I think.
Megan: Well, I was just thinking, the people who might be listening to this might be unmarried couples who are considering a move in together, might be people on the Um, and then the other side, maybe looking at separation.
Um, so I wondered if you had any practical advice. First of all, we'll speak about anyone looking to move in with a partner. What kind of advice would you give somebody considering that step? What's the first thing they should do?
Kimberley: Probably the first thing they should consider is how the expenses are going to be dealt with and whether that's going to be an equal, um, contribution or not because that might determine where they go in terms of the advice that Diane might give for a, for a prenup.
Um, and again, that. And that bears an importance into their will as well because again, if there's an unequal contribution, that might affect how their wills are going to be set up.
Dianne: If I'm consulted by someone who's thinking about moving in together. What I would normally cover firstly, as you've said, is how is this going to work financially?
Who's putting in what? Are you getting a loan from parents? You know, do you already own a property? Are you selling it? How are you going to arrange that? And how are you going to deal with the mortgage and so on? And what's your agreement? But I would also want to outline for them what the If you want to call it the default legal framework would be, in other words, what would happen if you don't do an agreement?
What might happen if you separate? What might happen with your deposit? What would you need to do to resolve the problems that arise? Because one example is often when people separate, one of them wants to buy the other out because you don't, you know, that's an obvious thing to want to do. It means you don't have to sell and somebody wants to stay there, someone doesn't.
If you're cohabiting and you're not married, then you If you can only achieve that result if you both agree to it. If you're married and one of you wants to take over the property, you could ask the court to make an order about that in a divorce, but you can't do that as a cohabitant. Therefore, having an agreement that says, for example, if we split up, I'll have the option to buy you out means that you have that mechanism available to you.
And I think if people don't understand where they would be without an agreement, then they can't really make an informed decision about getting an agreement. So it's about making sure they understand what may happen, of course, we can't be certain because law changes, you know, and if someone splits up in 20 years time, I don't know what the law will look like then, but we're, we can only do what we can do with that.
So understanding your rights and the implications of those, and also the rights you don't have, I think are really important in making a decision about your purchase or any agreement that you might have.
Paul: That's really interesting. And just going back to the previous point that when we were talking about Contributions.
I mean, I'm loathe to use the word uneven contribution because I'm sure people pay what they can pay in. But let's say somebody is paying the mortgage and somebody is maybe paying the bills. And let's say the mortgage is four times the bills when it comes to be sold, if people are going their separate ways at that point, what would be the default position?
Or is it so many other considerations there? Is that not a easy answer to give?
Dianne: One of the things I say all the time in my working life is, well that's a wee bit complicated but let's explain it. So that's one of those. Um, a couple of things are, broadly speaking, let's put aside an agreement for now, let's say that people don't have it.
So if you've cohabited for say 10 years and you've had that kind of arrangement. What we would look at is what your financial position was at the beginning of the relationship and at the end of the relationship and if there's a significant economic imbalance between you that isn't sort of evened up by another contribution, it may be that you have a claim to effectively be compensated for that.
And a good example of that would be, for example, if one of you had worked in a business owned by the other but hadn't been paid and didn't own any of the business. Uh huh. So, you know, you've... If you hadn't been doing that, you would have developed your own career, so you've lost out. So that's a possibility.
And if you have that claim for compensation, you can make that to court within a year of the relationship ending. There are complexities around doing that, and there are relatively few cases that reach the court because of that. And you mentioned a situation where one person's paying the mortgage and another person's paying the bills, and that absolutely is how a lot of people organise their affairs.
The difficulty is it's much easier to evidence a contribution to a house by payment of a mortgage than it is to say well I paid for the groceries, I paid for the holidays, I paid for the kids. I got that take away. Yeah, because the court, you're in a bit of a catch 22 because the court expects you to Provide evidence for any claim of that nature, but it doesn't want you to turn up with 25 pages of Tesco's receipts And you know, there's the Supreme Court has talked about this and say, you know People don't run their affairs on the basis of I put in £29.50 there and you put in £17.50 there So if you're the person who's paid for the groceries and holidays and the things like that, you're at a bit of a disadvantage in that situation I don't think there's an easy answer to that, but certainly, well,
Paul: is the easy answer have something in place that, you know, an agreement at the beginning,
Dianne: you know, um, it would be a little bit more difficult for it to cover that situation because what you could do and some people do, as you can see at the beginning, no one's ever going to have the right to make that kind of claim at all. But that's quite a drastic solution, although it has its place. Um, one solution, and this is going to sound a little bit old fashioned, is to get married.
But, you know, that's, that's, there's lots of other different reasons to make that choice.
Kimberley: Very romantic.
Dianne: You know, absolutely. As we've observed, I am the queen of romance. Um, but. Um, I think it's about, it's very difficult to say to people, you should run your financial affairs as if you were going to separate because people aren't going to do that.
At the end of the day, it's usually possible to achieve a compromise because ultimately, although I've talked about going to court, most people try to achieve a fair compromise with each other, even if you're separating, that doesn't mean you're going to go for the throat with each other and most people are reasonable about these things and ideally it can be resolved on that basis.
Megan: This might be a bit of a silly question, but it's just come into my head. Um, in terms of length of cohabitation, does that affect any? No. So if you are living together for one year or 20 years, it doesn't matter if you're unmarried.
Dianne: This is one of my, soap boxes so you're going to wish you hadn't asked me.
A lot of people think that if you've lived together for X amount of years, you're common law married, as if you take on the rights and obligations of marriage. There is no such thing in Scotland at all. You are still living together at the end of that period. So for 2 years, 20 years, longer than that, your legal status doesn't change.
Um, I think if it's a longer relationship, it's usually easier to show that there's been an economic imbalance because, you know, so much time has passed that, that things will have played out in that way. But there's no specific legal difference between a cohabitation that lasts two months or one that lasts 20 years.
Paul: Right, and what's the definition of cohabitation? Again, it's one of those silly questions, but I'm going to ask, what's the definition? I mean, is there a set amount of days a week you'd need to be living there to be classed as living there? Or is it, if you're on the council tax?
Dianne: It's more about intention. So you're living together as spouses.
So, you know, you have a romantic and physical relationship. Um, you share groceries, cooking, domestic duties, um, you socialize together, you represent yourselves as a couple to other people. And there, there can be interesting, um, examples that are nonstandard. Like if somebody's working away during the week or somebody's in prison or things like that.
And the courts have considered that, but it's primarily, I think, around the, the intention, because there is a difference between living together as partners and living together as flatmates, and those are the kinds of criteria that the court will, or a court would take into account if it was asked.
Kimberley: The length of the cohabitation would be relevant for a claim on death, so the sheriff would take that into consideration.
The maximum claim that can be made by a cohabitant on death would be, um, the maximum award would be what a spouse would be entitled to. But I rather suspect that if the couple had been cohabiting for a very short time, it's unlikely that they would probably, the sheriff would award the maximum amount.
So it's even more important, um, that a will's in place because, um, it's very, very uncertain what the sheriff might do.
Paul: That could be a real double tragedy, doesn't it? You know, if you were just eight weeks into living together and something horrendous happens, and, you know, the view is, well, you weren't really that serious. You've just barely got together. You know, you can imagine this.
Kimberley: Your whole world is turned upside down.
Paul: Yeah, and you're grieving and everything else happens.
Kimberley: Such a simple thing to have in place, but very much overlooked by a lot of people, for the obvious reason that thinking about that kind of thing is not nice, but it's so important.
Megan: And how complicated is it to get a will?
Kimberley: How long is a piece of string? No, it's um, most of the time for, you know, particularly for, you know, young couples coming in who are buying their first property and they've got a modest amount of savings and the situation's quite straightforward, um, the will's probably likely to be quite straightforward.
You've got a couple who, um, are doing a blended family situation in which they have children from previous relationships and they want to protect both the, the future inheritance of their children, but also. Protect their new spouse, um, in some way, shape or form, then you might be looking at something a little bit more complex, like a trust, a life rent trust, which allows the spouse to continue living in the property, but ensures that the investment that they've made in the property falls to their children eventually.
Otherwise, we can see what's called a sideways inheritance, where the assets pass from spouse one to the surviving spouse, and the surviving spouse then remarries. and the children of that relationship lose out entirely. That does happen quite often. Um, so these are the important conversations you would have with your solicitor when you're making your will just to understand what your options are and make the best choice for your situation.
Paul: Never assume it's, you know, I just say it's going to be automatically passed where you think it is. And what percentage, I don't know if you know the answer, but what percentage of people actually have a will?
Kimberley: I think it's about 40%. Um, the last time I saw a statistic there. Um, so not enough. So work to do.
Yeah. Yeah, absolutely. And I think it's, it's even rarer for younger people, you know, older people tend to plan this or they, you know, they have a bereavement of their parents, for example, and they start thinking, Oh goodness, I should do my own will, but actually the time to do that is much sooner and it gives you more options as well.
The sooner you plan, the more options that you have available to you.
Dianne: And would you say that people doing power of attorney were older as well? Absolutely. Because people don't think that they could have, people think it's about dementia or what have you, but you could have an accident. Yeah.
Kimberley: That's often what we see happen is that you've got a situation where somebody's been in an accident and they're not able to make decisions and the, um, either the cohabitants or that the spouse is at home trying to sell the property, but isn't able to until either a power of attorney is done or if, if a power of attorney cannot be done because the person cannot consent to it.
It would then be down a guardianship route for a court action, which takes a very, very long time. Um, so, power of attorney is, yeah, absolutely overlooked and it's associated with old age illness. But it's not just about that. It's, it's like an insurance policy. Yeah. You know, hopefully you, you never lose your ability to make your own decisions.
But if you do, you know that life's going to be easier for both you and your family to keep things going for you.
Paul: Yeah, plan for the worst and... Hope for the best. Absolutely. Or just live the best life, you know.
Megan: And as you mentioned before, your advice was, if you wanted to kind of avoid all of this, was just to get married.
Does getting married kind of negate a lot of these issues?
Dianne: It's more on my side of the house. that there's a different legal framework for married couples than there is for cohabitants. So I talked about, for example, being able to buy somebody out or get a transfer of the property. That's something a married person can do on divorce but a cohabitant can't ask the court to do that.
Paul: Sorry, past it to my head. Civil partnerships? Which side of the line are they on?
Dianne: Civil partnerships are, to all intents and purposes, marriages for these purposes. There are a couple of tiny differences buried in the schedule of an act somewhere and a couple of There need to be larger differences, but they're not relevant to these considerations.
So, and absolutely, relationships and marriages of all combinations and possibilities, we see them and they're dealt with in the same way. So, in terms of the legal framework, I think there's just more of it, actually, for... for married couples. The framework that we have for divorces has been around since 1985.
Actually, that seems like a really long time now. But the fact it's still there, it's only been updated once in 2006 It suggests that it's actually really workable. It is something that people find clear and it usually produces fair outcomes. And really it's about taking stock at the end of a relationship, having a clean break and walking away with a fair outcome financially.
And there are various principles that can be applied to make sure that that happens. But you have the ability to try to resolve things using different techniques. You can get that property transfer order that I mentioned. You can ask for a share of someone's pension if you don't have a pension or don't have sufficient pension.
You can ask for an order for the sale of the property, although a cohabitant could do that as well. Um, you can ask for a sum of money, a lump sum of money, or you can ask for maintenance to be paid to you on an ongoing basis. So you have a lot of tools, whereas cohabitants have kind of got the blunt instrument of if I've been unfairly treated or if I'm disadvantaged, I can ask for compensation.
So there's just more to, to work with, I think would be the way to see it. On, on the ending of a marriage.
Megan: In terms of, um, if somebody's listening and they're potentially at the start of going through a separation and looking to get a divorce, what would you say, in terms of their property rights, what, how, where do they stand right now?
Dianne: It's going to depend on lots of different things like when the property was bought, in whose name the property was bought, who's been paying the mortgage, who paid into the deposit, all of the things that we've been talking about.
Paul: Is there any change if somebody leaves the home? Does that weaken the position or doesn't it matter?
Dianne: It wouldn't have a significant impact on the overall financial settlement. It might have an impact on practicalities like seeing your children and so on. Children are top of the list for everyone who has them if they're separating. There's a whole set of issues around that as well. But, um, the first thing to think about is I think it's just to, and you know, obviously I'm going to say this, but you need to take advice from a solicitor.
Just because sometimes people say, okay, I'm splitting up, let's put the house on the market and they go off and do that, but then they don't realize that there's this bigger landscape of other assets like pensions and so on that need to be taken into account. And then when they get to the point of finalizing the sale, they, they run into someone like me who says, wait a minute, have you thought about all this other stuff?
So the earlier that you have that conversation, the more rights you'll understand. And we're not going to push you into running off to get a divorce if you're not at that stage. And we don't want to make things, um, more adversarial or more difficult and negative. It's actually about trying to calm things down and be organized and rational about it.
But, um, it's best to understand the whole picture before you commit to anything like selling your house.
Kimberley: You asked earlier about the, um, What the difference is of, of, of just getting married. Um, from an inheritance point of view, anything that passes to a spouse is tax free, regardless of the amount.
So, um, sometimes my advice to clients is when they're making their wills, if their estate's over the tax threshold, the simple way to avoid, um, having a tax issue is, is to get married. Again, very romantic reason for tax reasons. Um, but it's, it's valid. It brings its own issues with Diane's side of, of things.
Um, but it, it, it's definitely relevant. Mm
Paul: What is the tax threshold? I know what it is but what's the...
Kimberley: £325,000 there are additional top ups, um, on, on top of that, depending on your circumstances. But 325 is the, what we call the nil rate ban. So if your estate is more than that, then there's potentially tax to be paid at 40%. One of the things that I think is important, particularly for young couples with young families, is when they're thinking about whether or not they need a will, the answer usually is yes, you should do a will, but particularly if they have children, because it allows them to nominate a guardian in their will to look after the children if something happened to both, or one or both parents.
And that's something that's often overlooked, because, you know, children are very, very important as we know, and... It's such a simple thing to do, um, to have in place.
Paul: Um, we've spoken a lot about wills, and there is an obvious question here. I'm thinking mine's in the top drawer. Tell me where it is. But where do you put your will?
Do I give it to you? Do I keep it? Where do I put it?
Kimberley: So usually what would happen is you'd come into the office and sign your will, and then we would keep it in the safe, and we would send you a copy to give at home. But you can keep your will anywhere you like. There's no central wills, uh, bank as there is in England.
They've looked into doing it in Scotland, but it's not quite kicked off yet. So you can keep your will anywhere, but generally people will keep it with their solicitor and keeps it safe. When you're purchasing a property as a couple or as two people, um, you can own the property jointly in one of two ways.
One is called survivorship and one is called pro indiviso. Survivorship means that there's an automatic transfer on death. So in the death of the first person, That person's share automatically transfers to the other. It's automatic. It's instant. And there's no paperwork required for that to happen.
Those types of agreements, um, are quite rare now. Um, for the simple reason that you don't get the flexibility that you do with the next option, which I'll talk about. which is called Pro In Diviso. So the survivorship destination, we see in a lot of older title deeds, but they're, it's not being phased out as such, but it's definitely rarer now because it doesn't give you the flexibility to say in your will, I want this person to get my, my share in the house.
The survivorship would trump whatever's in the will. So generally speaking now, when people purchase a property together, it's purchased in pro indiviso shares. Your solicitor, when you're purchasing, should tell you about that. And you do have the option of asking for the survivorship, but as I say, it's very, very much, it's very rarely recommended.
Pro indiviso means you each own a one half share, and on your death, your one half share will go to the person named in your will, or if you don't have a will, It will fall under the rules of intestacy.
Dianne: Yep. And I particularly don't like survivorship destinations, and Kimberly will have heard me moaning about this in the office, because from my point of view, if you own your property jointly to the survivor, then you separate, then if you pass away over the period of time that we're negotiating your separation and your divorce.
It's not usually possible in a separation agreement to do away with a survivorship in a legal way, you've got to actually effectively transfer the property back to your joint names without the survivorship, which is a cost people don't want to incur. So, protecting clients over the period between separation and divorce where there's a survivorship, you have the risk that the other spouse will get their half without it going through the process, as Kimberley has said, and usually that's not what people want.
One of the other questions I get asked as well is, where do you put your separation agreement? Where is it stored or your prenuptial agreement or whatever? Um, and unlike Kimberley, we don't generally keep those for you, although we will if you ask him. And in fact, we can put it in the same envelope as your wills.
But a lot of these agreements can be sent to a central register, unlike with wills. And basically the register keeps the original and gives you a certified copy of it. And then you keep the certified copy with your other important papers or we can keep it for you. But one of the benefits of that arrangement is that if you lose that or something happens to you, we can always obtain another copy from it.
So if there's any doubt about an agreement or you think you might have made one and you're not sure of the details, because that does happen. Especially a long time later, we can get another copy for you and you don't have to worry about losing the original, so that's usually what we do.
Kimberley: Don't lose your will though, because that's a problem.
Paul: This could make a great soap opera. The next season is Succession, I can feel it coming up.
Megan: Well, thank you both very much for coming in. That has been a really interesting and informative chat. I've really enjoyed that. Well, maybe not the happiest subject matter, but it's been very interesting.
Paul: It's important, as you say.
The idea of going early and just say almost confronting these things well ahead of time and having that, you know, that painful conversation that you've probably only ever have to have once and it's agreed. And they just say the heartache and all the things that that would save in the future. Why wouldn't you?
You know, absolutely. I've learned a huge amount from this. It's been great. I really appreciate it.
Megan: And I guess if anyone's listening and they're on the fence, they think, Oh, I don't know what advice is right for me. They can pick up the phone and just have a chat with you guys?
Kimberley: I do a 15 minute free consultation.
Um, there's no obligation. It's just a chat. I can't necessarily guarantee that I can help you at the end of it. That's the idea of the chat. Um, just to see if it's something that I can do. Um, so I can do that for anybody who has any issues around, um, wills or inheritance. Um, or, or estate planning. Sort of a pre meeting
Dianne: Um, we tend not to do that so often, just because for me to be able to give you a reasonable steer, I need to know so much about it that we're getting beyond the performing point. And I'm a bit, I was a bit nervous about pointing someone in the wrong direction by accident.
And not that. I think you're not, but just there's a such a variety of different situations. Um, we would normally, I'm very happy to have a conversation with someone to see if they think that we, they could work with us or if they've got a couple of burning questions. But usually what we'd offer is a meeting for a fixed price so that they can budget for that.
And at the end of that hour long meeting, someone should have a pretty good idea of their rights and obligations and options. And then they can go away and think about what option might work best for them, including doing the same sometimes. I don't have to continue, but, um, that, that's the aim is to answer all of your questions.
And for, for me to do that, I need to know a bit more about you than you might want to tell me.
Paul: You'll get it out of them, Diane, I'm sure. Okay. Well, thank you. I mean, Diane Kimberley, it's been an absolute pleasure as I say, we've learned so much from that. Yeah, I think that's got to be a record for asking the most questions.