In Scotland, the most usual way of sorting things out at the end of a relationship is to enter into a written Agreement. “Ways of sorting things out” sets out the process you can use to identify the terms of an agreement. If you have used mediation to identify a mutually acceptable formula then each of you would have your own advising solicitors to check over those terms and in most cases put them into a binding Agreement.
If you are using the collaborative process or conventional negotiation then the solicitors involved will draw up a document setting things out. This document may be called a Separation Agreement or a Minute of Agreement. It can be worded in such a way as to have the same force as a Court Order so far as the financial side is concerned. In terms of a married relationship, the Separation Agreement or Minute of Agreement operates a bit like a financial divorce. Only a Court can end a marriage by granting a divorce or dissolving a civil partnership. The word ‘dissolution’ is technically the term for the legal ending of a civil partnership. Most people think of it as a divorce for either married couples or civil partners so the word ‘divorce’ will be used to cover both, although there are differences in the actual procedure. That is always a significant step. However, all the other aspects can be dealt with before that step and set out in the Agreement.
If matters cannot be resolved by agreement then on divorce, the Court should be asked to decide about the financial aspects and also make arrangements for children if that has not been agreed.
An Agreement can cover as much or as little as you want. You could simply agree about financial support for a trial period of separation. However, if you are going to the effort of having a written document prepared, you are more likely to want it to cover all the outstanding matters.
A Separation Agreement usually sets out where the children are going to live and the time they will spend with each parent. Arrangements about children set out in a Separation Agreement do have not the same force as a Court Order. In most cases they provide a reliable enough framework but if there was any real danger of children being whisked out of the UK by the other parent, a Court Order would be safer. If matters were as adversarial as that, it is unlikely you would be considering a Separation Agreement!
Depending on how the division of the joint matrimonial or partnership assets is decided, the Agreement may be to allow the family home to be sold and if so, to say what share each of you should receive. Alternatively, the house and secured loan mortgage might be transferred from joint names to one person. If the house is rented, the tenancy could change hands with the agreement of the landlord. The question of occupancy rights might also have to be dealt with.
Division of the contents can be sorted out, preferably with a common sense approach, to reflect the practical needs and wishes of all concerned.
To achieve a fair division of matrimonial assets you might agree to share pension interests and it is possible to have a pension sharing provision set out in the Separation Agreement. It is very important to remember that the pension sharing is only implemented once a divorce is granted. Implementing means transferring the pension credit from one person’s name to another. If you are receiving a pension credit it will depend on your age, not your former partner’s age, when you receive the benefit from it. If a pension credit is going out of your pension fund then whenever you reach retirement age, it will be the reduced amount which will pay your pension, even if your partner has not yet reached retirement age by then. The other very important thing to remember is that a pension sharing provision set out in a qualifying agreement will only be valid if the divorce Decree and the provision is intimated to the pension fund within 2 months of the divorce order. Your Solicitor would attend to that on your behalf.
Sometimes an Agreement might set out that a capital payment is to be made by one person to the other. The Agreement will detail not just the amount but how and when it has to be paid and whether any interest should be added on until payment is complete, or in the event of late payment.
You might well both agree to give up any claim you could have had against the estate of the other person on death. Just because a married couple or civil partners separate does not mean that their succession rights end automatically. It is nearly always a good idea to draw up a Will after a separation. It is also important to consider the terms of any nomination in the pension interests you have since that would have to be dealt with separately from these other steps.
The question of ongoing financial support should also be dealt with. Money payable between spouses or civil partners will usually have a cut off date. Support for children is likely to be affected by the Child Support Agency (now administered by the Child Maintenance Enforcement Commission – CMEC). Even if you both agree on an amount for child support then as things stand, one year after the Agreement is entered into, either of you could ask the Child Support Agency to carry out an assessment. That means that the amount now fixed in terms of Agreements tends to reflect the Child Support Agency formula.
Any Agreement setting out ongoing support will normally also set out the possibility of review on a change of circumstances and sometimes provide for index linking of the amount.
There will also be provisions that make it absolutely clear you have each had full information and advice and are quite clear you wish the Agreement to be formally binding.
The Agreement will be rounded off with your consent to have it registered for preservation and execution. Although this sounds alarmingly like sanctioning capital punishment, it allows for the possibility of chopping off money rather than heads! It allows the Registered Agreement to be enforced in ways that a Court Order can so far as the financial aspects are concerned.
There may be other documents to be prepared in order for some of the agreed steps to be carried out. For instance if a house transfer is involved then a document known as a Disposition has to be prepared to change the ownership. If there is a secured loan, then either a variation of the existing loan or a discharge and a new Standard Security will be needed to sort out that responsibility.
Now that there are potential claims at the end of a cohabitation it is not uncommon for couples who are setting up together though not marrying, to set out their intentions about the money aspect in writing in a pre-cohabitation contract. Before people marry or enter a Civil Partnership they sometimes wish to enter into a Prenuptial or Pre Civil Partnership Agreement. That is particularly relevant if there are quite a lot of assets in existence already or if there are children involved, from earlier relationships. These extra elements can mean that the “default mode” in the legal rules is less appropriate and “bespoke” arrangements more necessary. Sometimes a couple will want a Postnuptial or Post Civil Partnership Agreement to deal with things that happen during the marriage which could impact on the money aspect if they end up separating.