Q. My partner and I met four years ago and have been living together for three and a half years. We are now separating. She has two children from a prior relationship who live with their father and visit us twice a week. We are both working professionals and have been sharing our money, apart from in one area.
My partner has been paying her child support from her bank account as well as a couple of legal bills for sorting out parenting arrangements with her former partner.
I have been saving up for two years to buy a boat. It was something we talked about all the time - she has kids and I'll have a boat. I expected to keep these savings when we parted, but she said she's entitled to half of it. This is totally unfair - I was happy to contribute when the children visit, and we have needed a bigger apartment for when they stay with us, but this is not what we agreed.
Can she really do this? If we're sharing bank accounts, can I be compensated for all the child related costs she has paid?
A: Verbal agreement
Unfortunately, a verbal agreement is not enough when it comes to dividing your relationship property, you need a formal legal agreement like a prenup. Without a formal agreement the terms of your separation will be governed by the Property (Relationships) Act 1976.
The Property (Relationships) Act 1976
The Act dictates that once you have been together for three years, generally speaking, your assets and debts become "relationship property" which are divided equally if you separate. This includes assets like property, bank account balances, superannuation, cars and furniture. You can have relationship debts such as credit cards and business debts, even if these debts are only in the name of one spouse.
Some assets and debts can remain your "separate property" which you do not need to share. This can include:
• Money in bank accounts which existed prior to the relationship, and that are kept separate and do not contain income earned during the relationship.
• Any portion of your superannuation/KiwiSaver acquired prior to the relationship.
• Family heirlooms and taonga.
• Debts incurred before the relationship started, such as student loans.
Where someone pays personal (separate) debts using relationship property, then the law allows compensation for this, giving the other partner a greater share of the relationship property in the settlement.
Your bank accounts
Unfortunately, because your savings were accumulated during your relationship, they are considered relationship property and will have to be shared equally with your partner.
Child support and legal fees
In similar situations to yours the Courts usually decide the child support payments and legal fees are "relationship debts". The rationale is that the debts are known about by both parties and are part of the household expenses.
This rule surprises people, and many find it unfair. However, it is the law.
You should meet with a lawyer who can look at your situation in detail and explain your rights and options. Then talk with your partner, either by yourselves or with your lawyers, to try and work things out. Many couples settle their relationship property by agreeing to what they think is fair, and not necessarily what the law entitles them to.
I would avoid going to Court if you can – it is expensive and time consuming. It is usually best to reach agreement, and the sooner the better, so you can both move on.
It is important for couples to discuss their financial situation before they move in together, including their debts and responsibilities, and how they expect their assets to be divided if they separated. Not an easy topic to raise, but better to start on the same page rather than trying to discuss it once you are living together.
Once you have agreed on this, consider getting a prenup drawn up – it's the only way to ensure that what you agreed is legally binding. The process requires each party to have their own lawyer to provide independent legal advice and then to witness them signing the prenup.
Without a prenup, the Property (Relationships) Act will dictate the terms of your separation. An equal division of assets and debts might differ greatly from what you verbally agreed or what you think is fair.
Jeremy Sutton is a senior family lawyer, specialising in divorce cases where there are significant assets, including family trusts and complex business structures. www.jeremysutton.co.nz. Do you have a family law question? Email it to email@example.com. Questions should not exceed 200 words. Please provide a phone number. Your name will not be published. Jeremy cannot answer all questions, correspond directly with readers, or give legal advice. Jeremy's advice is of a general nature, and he is not responsible for any loss that any reader may suffer from following it.