Q: I have been married for 20 years. I earned a high income before we had children but chose to be a stay-at-home mum after our second child was born. My husband has always handled our money. We have a joint account that I use to buy groceries and things for the children. After watching a friend go through a messy divorce, I wonder if there is anything I should be doing in case my marriage goes south?
A: Talking about finances can be uncomfortable for some people. However, when you are in a relationship, it is crucial to be on the same page. Opening the dialogue early can save you from stressful situations down the track.
It is excellent that you are expressing an interest in having more clarity in your financial situation. When marriages break down, one party can be significantly disadvantaged if they have not been involved in the family finances. They may discover that their partner has taken on significant debt or that the family home is not registered in their name as they believed it was.
The first step is to discuss your joint financial position with your husband. Consider where any income being earned is going, what assets and debts each of you have and whether these are registered in your joint names or not. It is very common for New Zealanders to have a family trust. The Trust will typically own the family home. It is important to know whether you are listed as a trustee of the Trust. If you are not a trustee, decisions about Trust assets can be made without your input. That could create problems if your marriage ends as trust property typically is not included in the pool of relationship property that must be divided between you.
If you are satisfied with how your family finances are structured, you may be happy for your husband to continue managing the finances. However, you should set up processes to ensure you are kept in the loop. For example, you could set up a joint email account for all correspondence about your mortgage, family trust or any other financial debt or asset. This would make any significant changes clearer to you.
Contracting out agreement
If a marriage ends, you will need to divide your relationship property. Relationship property includes the family home, family chattels and any asset (or debt) acquired during the relationship. You can decide how to divide your property, but the law provides that you are each entitled to 50 per cent. As you stepped away from your career to look after the children, your earning potential is likely to be lower than your husband's.
A contracting out agreement would provide financial security and certainty if your marriage ends. In a contracting out agreement, you can agree how your property would be divided. You can enter a contracting out agreement any time before or during your marriage. You can also agree to other conditions that would provide you certainty and time to find your feet. If you separate while the children are young, you could agree that you will remain in the home for a year after separation and then the home will be sold or bought out by one of you. A contracting out agreement provides certainty and reduces the need for negotiation. It is less stressful, allows you to move on with your life and reduces the need for lawyers after separation.
Spousal maintenance is available at the end of a marriage if you earn less than your partner because of the division of responsibilities during the relationship. Spousal maintenance is ongoing financial support provided by one party to another when a relationship ends. It is only a temporary solution to allow you time to adjust and set yourself up financially for the future. It is different to child support which is payable until the children turn 18.
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The amount of spousal maintenance you will receive depends on your circumstances. However, you can reach your own agreement about how much spousal maintenance will be paid and for how long. If you enter into a contracting out agreement, you can include a provision for spousal maintenance. It is often beneficial to agree to this in a contracting out agreement as people often feel less generous after separation, especially when tensions are high.
One of the most important things you can have at the end of a relationship is a strong support network. Family and friends can help you recover from the shock and heartbreak. However, a divorce coach can also help you through the separation process. A divorce coach or counsellor can help you through the emotional decisions you will need to make and help craft a plan for the future. Divorce coaches can help you before you separate and suggest what you need to get in order, before having the actual discussion with your husband.
The earlier you have open conversations about your joint finances with your spouse, the better. It may feel awkward to bring it up now, but it is never too late. You should have clarity over your financial position in case your marriage ends, or your partner passes away. This will reduce the chance of a nasty surprise down the track. To secure your financial position, you should enter into a contracting out agreement to agree on how property will be divided if you separate.
• Jeremy Sutton is a senior family lawyer, specialising in divorce cases where there are significant assets, including family trusts and complex business structures.