When it comes to negotiating the financial settlement for a divorce one very common question we hear is, “Will a new partner affect my divorce settlement?” Every time we are asked this question, we need to consider the specific circumstances of our client and even then, it’s difficult to give a definitive answer.
Every case is different
As the specific circumstances of each divorce and financial settlement need to be considered on a case by case basis, this article should not be considered as legal advice. If you need family law legal advice based on your specific circumstances you have the option to book in for a free 30-minute family law consultation but for now, this article will give you a flavour of what the family court may consider in relation to a new partner and the financial settlement.
What is the definition of a new partner?
A married partner would certainly be considered in the financial negotiation but in the majority of negotiations the couple are pending divorce so are unable to remarry. Cohabitation and intention to cohabit are the circumstances when a partner is likely to be considered. What therefore is the definition of cohabitation? In the case of Kimber v Kimber some guidelines were issued;
- living together in the same household
- living together involving a sharing of daily tasks and duties
- the level of stability and degree of permanence in the relationship
- finances and is the way in which financial matters are being handled an indication of the relationship?
- a sexual relationship
- children—what is the relationship between the cohabitant and the children; is there a bond?
- intention and motivation, and
- whether there is sufficient evidence that the cohabitation would be considered to exist in the opinion 'of the reasonable person with normal perception.'
Full and Frank Disclosure
The Form E, (the document which is used for each party to make full and frank disclosure of their financial position), asks for brief financial details of any new partner but this doesn’t necessarily mean the information is used. It asks for the details “so far as they are known” and so this enquiry, is not as wide reaching as it could be.
It’s important to note that if during financial settlement negotiations there is an intention to cohabit it should always be disclosed. If not, and cohabitation happens soon after the financial settlement is finalised and the Consent Order is approved, there may be grounds for a former spouse to challenge the settlement, if there is reason to believe ‘full and frank disclosure’ was not made at the time of negotiation.
When will a new partner be considered in the divorce settlement?
The court will look at the financial needs of the divorcing couple and the resources available to split.
There is no fixed rule when it comes to new partners and the divorce settlement. The court is obliged to consider the impact of a new partner but whether the new partner influences the final decision can come down to numerous factors including;
- The length and stability of the new relationship. The stronger it is, the more likely it will impact on the final settlement.
- Is there enough in the matrimonial pot to meet the housing and financial needs of the former couple without the inclusion of the new partner’s assets. If yes, they may be excluded.
- Does the new partner have an income and assets worth considering? If their income and assets are modest it’s likely to be excluded. If the new partner is a multi-millionaire, it’s possibly going to be considered.
For example, the former husband moves in with a wealthy new partner and the new partner owns a home. It’s possible the court will take the view that the former husband now has his housing needs met and that his living costs are significantly less because they are shared, therefore he has more disposable income. In this scenario the former wife may be awarded more of the matrimonial pot than she would have got had he still been single.
In another example the wife moves in with a partner that is on a low income and has very modest assets which have minimal impact on the finances of the former wife. In this instance, it’s possible the income of the new partner would be discounted.
In either circumstance, if there was enough in the matrimonial pot to meet the housing needs of both parties the court may not take into account the new partner, as their wealth, or lack of, has no bearing on the financial settlement.
Free 30 Minute Family Law Consultation
If you are negotiating a divorce settlement and are in a new relationship or thinking of taking it a step further and cohabiting, talk to us. During your initial 30-minute free family law consultation we can offer some initial guidance on the implications based on your specific circumstances.
