Q: I am planning to leave my husband soon but I want to be as prepared as I can. We have a large number of shared investments and bank accounts that we both have access to. I am concerned that once I tell him I want to separate he will lock me out of our accounts. We have over $1 million in cryptocurrency stored on a hardware-based wallet but I am not sure where he keeps it. I'd like to meet with a lawyer soon for advice. What can I do to prepare myself to leave him and before meeting with the lawyer?
Jeremy Sutton: If you are considering separating from your husband there are steps you can take to prepare yourself. These steps will help you feel more emotionally ready and initially progress the process of separation faster, allowing you both to move on sooner.
The most important thing you can do through any separation is to make sure you have a strong support network. This may include family and friends. It could also be a counsellor or psychologist if you do not feel comfortable speaking with family just yet. You can also reach out to a professional such as a lawyer or accountant who can give you some idea of the financial consequences.
Make sure you are looking after your own wellbeing. This will include maintaining your routines, including exercise and sleeping well. You could write in a journal to help you process the emotions but also note down any questions you have for a lawyer.
If you visit a lawyer, they will need information to advise you accurately. Try to make a list of all the assets and liabilities that both of you have. Next, obtain any evidence you can about the estimated values of those assets and liabilities such as the value of your home and vehicles, bank statements and KiwiSaver statements. Bank statements from the past 8-10 years can usually be downloaded from your online banking app. Try to gather receipts for large purchases or records of investments. All this information will help your lawyer obtain a full picture.
A lawyer will also ask about your income and your husband's income. If you have not been involved in the management of your finances it may be difficult to gather information. Try to ask questions about how much is in your accounts, investment portfolio or owing on your mortgage.
Meeting with your lawyer
Most relationship property will be divided evenly between you. However, it can get complicated if either or both of you have a family trust or a company. Trust property is not included in a relationship property pool so the same rules do not apply. Those are legal issues that are best to discuss with your lawyer. You can find a family lawyer in your area at the familylaw.org.nz website.
Look at the information you have gathered before your first meeting and make notes of anything unusual, such as large unexplained transactions out of your joint account.
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Preparing to leave
It will be a big adjustment to begin living on your own after being married. If you have not been in charge of the finances it may be helpful to learn about budgeting. You can learn budgeting tips at sorted.org.nz. You could also read Mary Holm's weekly Q&A column which offers a lot of helpful financial advice.
If you have been together a long time you will probably know each other's passwords or have a shared email account. To ensure that your discussions remain confidential, consider setting up a new email address for corresponding with your lawyer or other professionals. Make sure to use a unique password that your husband will not guess. Change your passwords to any other important accounts that you want to keep access to or keep private. You can use a password management application, such as LastPass, to store all your new passwords.
To address your question about cryptocurrency, I consulted James Swarbrick of Swarbricks, a lawyer with significant knowledge of cryptocurrency. If you have a significant investment in cryptocurrency it is important that you protect the keys and access codes to your wallet. When the hardware wallet was first used the software will have prompted you to write down the wallet seed words, which is a list of 12 or 24 seemingly random words that serve as a backup to your wallet. The seed words are critically important to recover your cryptocurrencies in the event the hardware wallet is lost or stolen. It is also advisable to create more than one copy of your seed words and to store them in different locations. If you do not have a copy of your seed words and your hardware wallet is lost or stolen, then it is likely the assets will be lost forever.
If you do not have access to the hardware wallet or seed words it may be difficult to prove what cryptocurrencies are held, particularly if your husband is not cooperative. Your lawyer may be able to help you identify assets as information may be available through cryptocurrency exchange accounts, which might be identified by bank statements from the time of purchase. It may be possible to see if someone has moved your assets after the date of separation due to the open nature of many cryptocurrency blockchains. However, some information such as a wallet address is required to be able to begin tracing assets.
The hardware wallet and access codes could be held by trusted third parties to ensure assets are not lost or hidden during the separation process. However, seed words should never be shared with anybody without taking precautions such as enclosing the seed words in a sealed, opaque, tamper evident bag.
You can take steps to prepare for separation. These steps will probably reduce your legal costs, keep you focused and get the process rolling more quickly in the early stages. The early stages of a separation usually involve significant time spent finding and exchanging documents. If you start the process now you will ensure you are moving towards resolution, allowing you to move on.
- Jeremy Sutton is a senior family lawyer, specialising in divorce cases where there are significant assets, including family trusts and complex business structures.