A prenup, or prenuptial agreement, enables partners to ‘contract out’ of the equal sharing of relationship property under the Property (Relationships) Act. Many couples wonder whether they should get a prenup agreement. Depending on your situation, we think this is a good idea.
The broad definition of what makes up ‘relationship property’ means you could be sharing your assets with your long-term partner. Assets which you have brought solely could be relationship property. This might be a house which only you owned before the relationship started.
This could put your financial situation in jeopardy. That is, assuming you do not intend to share your assets with your partner. No doubt if you want to keep your assets which you brought into the relationship separate, you should get a ‘prenup’.
When should you get a prenup?
The Property (Relationships) Act 1976 applies once the parties have been in a qualifying relationship.
These are usually a marriage, a civil union or de facto partnership for 3 years. A qualifying relationship under the Act has its own definition.
Factors for a qualifying relationship might include:
How long you have been in relationship;
How financially dependent you may be on each other;
The ownership and use of shared property;
The degree of mutual commitment to a shared life or
The reputation and public nature of the relationship.
These factors are only examples.
Am I in a “de facto relationship”?
The Act almost definitely applies if a couple have been living together for 3 years. But it might not be necessary to have lived together for this long or to have shared finances to be deemed a couple.
Most noteworthy, in the case of Scragg v Scott  NZFLR 1076, the parties only lived together for short periods of time because of Mr. Scragg’s overseas work.
Therefore no continuous joint living period occurred of more than nine months. The Judge described their living arrangement as a de facto relationship under the Act.
This was on a broader consideration of the nature of a relationship contained under section 2D of Act. The Judge considered the mental aspect described as “a commitment to a continuing future relationship.”
What if you live separately from your partner?
If you live in separate houses and don’t share finances you might still be in a “de facto relationship”.
Similarly, the High Court in Moon v Public Trust and Anor  NZHC 1169 expanded the scope of the definition of “de facto relationship”.
Although the parties had lived in their own separate homes, it was still considered a de facto relationship. In addition, the couple shared few common household possessions for the entire 27 years of their relationship. But Justice Powell did not view the lack of common physical assets as going against a relationship.
Instead, the deceased’s health, and the plaintiff’s home-based business made it unreasonable to expect shared living arrangements.
When should you get a prenup agreement if you are in a de facto relationship?
Certainly, Agreeable recommends getting a prenup agreement within the first 3 years of the relationship. The longer you leave it, the greater the risk, the harder the conversation – and the more expensive it could eventually be.
You and your partner will then need to go to independent lawyers. This is called the “certification process”.
During the certification the lawyer will discuss the agreement’s consequences for you personally.
You might be entitled to more under the Act. This will be discussed once your situation is fully understood.
Ready to get a prenup agreement?
Agreeable has helped hundreds of Kiwis with getting their agreements, with a simple and trustworthy online process. You can purchase one with Agreeable here for $350, and after answering some online questions, you’ll have your automatically-generated agreement today. Then, we can also find you a lawyer to certify the prenup agreement.
Certifying the prenup agreement makes it legally binding. Therefore, don’t skip this step. It could cost you a bit upfront now. But if you don’t, it could end up costing you more down the track.
Agreeable understands this can be a barrier for busy people. For the reason that it takes time or networks to find a lawyer, Agreeable has a panel of family lawyers.
Our lawyers are relationship property experts and family lawyers. We provide this service online. Due to this, we offer more affordable rates.
Ready for certification?
If you have the agreement above, and are ready to certify, click here or contact one of the Agreeable team. You can email us at email@example.com or fill in our contact form.
A contracting out agreement, also known as a “prenup” or a relationship property agreement, is an agreement with your partner that says who owns what, and how you will divide up relationship property.
By making a contracting out agreement, you and your partner can “opt out” of the “normal rules” which normally apply under the Property Relationships Act (the ‘Act’). These rules detail how the Family Court might divvy up your shared relationship property.
This is for couples or parties intending to enter into a relationship, whom have assets which may be relationship property. Remember – your agreement will not work (it won’t be legally binding) if you do it yourself!
If you are already in a relationship and looking to separate, more information about separation agreements can be found here.
How might the Court split our relationship property?
A Court will try to balance the division of property between couples. The Court recognises that there might be unequal bargaining power between couples and so there needs to be a just way of dividing up relationship property. The Act encourages couples to decide freely. This means you both choose how you want to separate property if your relationship ends.
When can I create a contracting out agreement?
Usually couples will get a contracting out agreement when they are newly in a relationship, thinking about getting into a relationship or before marriage or living together.
As with most things, it’s best to get one as early as possible if you think you will need it. This could avoid awkward conversations or potentially expensive proceedings later down the track.
How do I get a contracting out agreement?
You will need an agreement in writing that is certified, signed by both parties and their independent lawyers following independent advice on the agreement terms. Agreeable has helped hundreds of Kiwis get a certified agreement with our simple, 100% online process.
What are some issues to be prepared for?
Firstly, ensure that your partner is willing to agree to get a contracting out agreement. As this process is voluntary, both parties must be committed.
The usual issue with contracting out agreements is that one party may be stopped from giving away their rights without knowing the consequences of signing the agreement or what they are entitled to under the Act. It does this through a certification system.
This means that independent lawyers must provide you with advice as to whether to sign the agreement or not, or put forward better terms for you. There is a higher risk changes to your contracting out agreement will be made if your agreement does not appear to be fair. Fair doesn’t necessarily mean 50/50 but it does need to show that it is not a “serious injustice”.
How do I make sure our contracting out agreement is fair?
The Act also attempts to prevent a partner from entering an agreement when the other partner is bullying them into it.
A court can, even if an agreement satisfies the criteria under the Act, still set aside an agreement if, having regard to all the circumstances, it is satisfied that giving effect to the agreement would cause serious injustice. There are a few factors a Court will look at which will be important to consider in your agreement:
whether the agreement was unfair or unreasonable in light of all the circumstances at the time it was made;
whether the agreement has become unfair or unreasonable in the light of any changes in circumstances since it was made (whether or not those changes were foreseen by the parties);
the fact that the parties wished to achieve certainty as to the status, ownership, and division of property by entering the agreement and of course any other matters that the court considers relevant.
The best way to ensure your agreement is fair might be by asking a trusted person. You can run this past close family or friends to see what they think of your agreement terms. Use common sense here to save yourself hassle down the road if lawyers disagree!
I brought ‘x’ into our relationship. When does our separate property become relationship property?
Each party will have to define what assets could be classified as ‘separate property‘ and what property could be classified as ‘relationship property‘. The Courts will recognise if the non-owning partner contributes to any increase in value of the other partner’s separate property. This increase is deemed ‘relationship property’ and thus equally shared.
Note that this may well include indirect contributions too.
Contributions do not have to be financial ones. Looking after the family home or children can be deemed a contributing factor. The Courts will take this into account when determining division of property.
When should we update our contracting out agreement?
Your agreement will not last for an eternity. It won’t cover all future assets that you acquire throughout your relationship which might be considered relationship property. The longer you leave an old contracting out agreement, the higher your risk. It is safe to update your agreement when your circumstances change. This might be after a particular event or every couple of years.
We are heading into a new relationship. What if we start a family?
That is great! But children can add complexity to your agreement – not to mention relationship! This means this is a factor to consider if you see the potential or are trying to start a family together. Our lawyers will advise you on this. It will likely mean that additional clauses will need to be drafted into your agreement. This is to take into account what happens if one partner has to take time off to take care of children later on.
We have agreed on what’s mine etc., what next?
You will need this contracting out agreement certified by a lawyer. Agreeable provides this service as a package so that it is easy for you and your partner to get this done if you use our agreement. We strive to make this process as simple, stress-free and predictable as possible. We provide one affordable fee. However, our lawyers are independent. This means they will have your best interests in mind.
Our situation is complex. Where do we go to for help?
Agreeable always does a preliminary assessment as to whether a contracting our agreement suits your situation. We also have the option of our lawyers providing you with tailored legal advice. Please enquire with us. We will see how we can help. If not, we may be able to direct you elsewhere.
Can you still keep, or get rid of, your family home or investment properties after you separate? Of course!
What is a “Buy Out”?
A mortgage buyout is one solution if you and your partner separate but still have mortgage obligations and one partner wants to keep the house. A Mortgage Buy-Out involves one partner purchasing the equity interest of the other.
But make sure you have this conversation with your partner early – mortgage buyouts require both owners to co-operate.
Steps to buying your partner out
To be able to buy your ex-partner out, you need to be able to take on the whole mortgage on your own and have enough to pay your partner for his or her share of the equity in the property.
Get legal advice
Get valuation on the family home or properties to be divided
Agree on your partner’s “buy-out price”
Get a separation agreement certified. This is legal and binding on both of you rather than just a “hand-shake” deal with risks!
Settle your new mortgage (if necessary)
Can you afford it?
The first question you should ask yourself is if you are financially in a position to afford the mortgage payments. Secondly, will the bank agree to you being the sole mortgagee? Note that when you separate, you are (usually) splitting half the proceeds from whatever you both sell – including the Family Home. You are left with half (or thereabouts) and must start a new life on this amount. Think carefully before committing to selling the Family Home. It may be a better financial decision to buy-out your partner – or not depending on your own financial situation.
Is Your Partner buying out your share?
If your partner wants to keep the home, make sure you obtain an appraisal if you cannot agree on the value of the Family Home. Also, you may have to adjust to the fact that it is no longer your home and this may mean unfamiliar people living in it. obligations to your lender?
Your obligations to your lender
If you have been the party released from your mortgagee obligations, ask for the bank’s proof that they have discharged you from your obligations i.e. check you are no longer on the mortgage. This may need to be done after you have obtained Separation Agreement as some banks request to see this for obvious reasons before they take one partner’s name off the mortgage.
What are your other options if you cannot afford the mortgage yourself?
If your mortgage payments are almost paid off and you and your partner are on good or amicable terms then you could agree to continue to pay the mortgage until it ends. This is ideal and possibly not the option many can take. In this situation, it may still be untenable for your partner to stay living in the house while you both pay off the mortgage. In this case, the partner who is having their share bought out, will have to negotiate rent.
Can you substitute someone else on the mortgage?
It will be hard to sell the Family Home with negative equity. Unless you are able to negotiate other terms with your mortgage provider then you will both continue to be liable for the mortgage repayments. Potentially you could substitute your partner for other family members or friends who are interested or able to support you in the mortgage if you decide to keep the house. If you decide to go with this option, it is a good idea first to have already brought-out your partner.
What is the “Buy-Out”?
A Buy-out means you must identify the equity in the property – the difference between the mortgage balance and what the property is currently worth. It’s not always going to be an equal split when you separate from your partner. This may be the case if one partner’s family helped to improve the value of your home by providing money for renovations, or perhaps one of you contributed more to the deposit of the home.
How do you calculate the “Buy-Out” price?
But assuming that you both contributed equally to both the deposit on the home, and the recurring mortgage payments, this will be a simple calculation. To clarify, you take the current value of the property (note that you may both want to get property Valuers to obtain an accurate market value of the property), subtract the amount outstanding on the mortgage, and any other payments which were not contributions equally by you both, and then divide the remaining amount by two.
Example of Buy Out calculations
So, for example, if the property is now worth $500,000 and there is, say, $250,000 left to pay on the mortgage, you would need to find $125,000 to buy out your ex-partner’s share of the property. If, for example, the property is worth $500,000 but $100,000 was provided as a loan by your parents to renovate the house or for the deposit, you will need to pay this back first. Say you have no mortgage on the house and you were to divide the sale of proceeds. This means you and your partner will be splitting $400,000 instead of $500,000. However, if you were to buy out your partner’s share, and there is still $250,000 left to pay on the mortgage, you will need to pay out the $100,000 first. Assuming the loan was a gift from your parents, this means that you will need $75,000 to buy out your partner.
How to get a valuation on your Family Home or other properties
The Buy-Out Price above depends on the value of the home if you are keeping the Family Home. Note that your bank may also want you to get a valuation from a registered property valuer before they refinance the mortgage to you.
It is important to get a valuation from a certified registered valuer. This will determine the market worth of a house or property. A registered property valuer combines all their knowledge and experience with their observations and research undertaken of the property and its surrounding area, and determines the market value.
Cost of a valuation
A property valuation costs approximately $500 – $800 plus GST. However, a valuation does have a limitation period. This means it will remain “current” only for a limited time. This is normally anywhere between three to six months. Your ex-partner may agree to split the cost of the valuation.
Where to find a registered valuer?
Just by doing a Google search, we were able to find the following registered valuers:
Another good tool may be Property valuation, a website which allows you to find a registered property valuation near you. Note that there is also a Valuers Registration Board. You can go to them if you have a complaint or any questions such as the standing of the valuers you are going to. If you want to get the experts in, a registered property valuation can be done and costs from $500. If you do not want to spend this fee, there are other options and these are explored below.
How to work out a Family Home’ Market Value yourself
Real estate agents
You can ask Real Estate agents in your area who are experienced and acquainted with properties which are similar to yours. Perhaps ask for a few different estimates from local real estate agents and take the average of these. Just be aware that if these agents are only looking at comparable sales in your area, you will want to take into account differences such as location, exterior presentation, and conditions of the property and any changes in the CV values.
In comparison, a more objective estimate may come from the property’s Quotable Value (QV). QV has some great online resources there too. There are both free and paid options to purchase local sales reports which may include your property. Sometimes the rateable value (government valuation of the house) will be accurate as to market value but it cannot be relied on alone. You can find out rateable value information on your local council’s website for free.
Unless a combination of both of the above methods will give you a more accurate estimate of market value you can both rely on, you risk undervaluing or overvaluing the buy-out. In short, get as many assessments as you can possibly afford!
Get this written down in a Separation Agreement
Getting the above formalised in an agreement does not have to be expensive. At Agreeable, the cost of the Separation Agreement is $350.00. The cost of certification is proportionate and costs no more than a couple of thousand for both you and your partner. Most importantly, whatever you agree to do with the property, you both need independent legal advice. This protects all parties and stops one partner from lodging a caveat or notice of claim later on which can affect the freedom you have with the property. After that, it may also be helpful when it comes to applying for finance to show them this agreement as some lenders may be wary of unresolved relationship property issues.
Certificate of Title
Firstly, it is important to get a copy of the certificate of Title of your property to check whether your name is on it. Importantly, you will need to get your partner’s name off the Title to the property once they no longer have any interest in it. For instance, if you do not do this, your partner could put a registered interest against your property (a caveat). In other words, this is a notice that someone else has an interest in this property. This cannot be lifted unless by consent or by a hearing.
What if my name isn’t on the Title?
Meanwhile, if your name is not on the mortgage or deed of the house then that does not mean you have no rights or claims to the property. This means you should talk to a lawyer. If you have been living in the property or are in a de facto relationship with your partner, this means the Family Home may be relationship property – unless you have a prenuptial agreement or contracting out an agreement in place.
After the Buy-Out: Pay your partner’s Buy-Out Price
Above all, pay out your partner the buy out as you have agreed.
After the Buy-Out: Refinance the Mortgage
As a result of the Buy out, you will likely want to or may need to refinance the mortgage on your Family Home.
The cost of getting a Separation Agreement (or Contracting Out Agreement for that matter) is not expensive.
Certainly, it is less expensive than going to the Family Court for an order to divide up your relationship property.
If you are in a de facto relationship, you effectively have the option of an informal separation through getting a separation agreement which details how you will each divide your assets. This agreement needs to be certified by two independent lawyers.
After that, you may wish to register the separation agreement in the Family Court as a ‘consent order’ so that it becomes legally enforceable.
What if we are married?
But if you are in a marriage, you will need to get a divorce. This is done through an application which depends on whether you both agree to the divorce, or whether only one of you wants to get the divorce.
However, you will then also need a separation agreement detailing how you want to split your relationship property assets. Can’t agree on what is shared relationship property? See our article on what assets are usually deemed to be relationship property.
Above all, note that couples have a time of 12 months from when their marriage is dissolved by a court order to divide up their relationship property.
Variable legal cost of a Separation Agreement
The reason why there are differences in the costs of a separation agreement where you both choose separate lawyers is that this can turn into an adversarial process. Although your lawyer must be independent and act solely on your best interests, this should not be at the expense of an amicable separation where you and your partner have already agreed and decided on the process of splitting your relationship property assets.
The New Zealand law society has a guide on what you can expect to be charged for legal costs from our lawyer.
These costs can depend on the “importance and complexity of the matter, the nature of the work and how urgent it is, results achieved and the costs of running a practice, and any quote or estimate given, or fee agreement made at the outset”.
Agreeable does not have any disbursements as the entire process of certification is online.
Cost of the separation agreement (alone)
Agreeable enables you both to agree to terms which suit you and then to get this agreement drafted with the aid of an automation ‘bot’ via Autom.io. These bots ask you questions relating to your situation and puts the details you input into the agreement. You will then be able to download a Word document to edit if you have any changes to make on the final copy.
This takes out lawyers in the negotiation process which means it is both cheaper and perhaps a better way to preserve the relationship you have with your partner as no lawyers are involved to make the process tense.
However, if you were to get an agreement drafted by lawyers, there could be additional costs as each of your respective lawyers send the agreement back and forth with suggested edits or additions of clauses. Agreeable’s Separation Agreement only costs $350.00 online and this fee is payable directly on our website.
However, the cost of a legally binding Separation Agreement relates mainly to the certification costs of getting lawyers to independently provide advice as to signing the agreement.
After the cost of a separation agreement, is there a cost a ‘consent order’?
Yes. It currently costs $220 to the Family Court in order to make the agreement an enforceable order. If both of you entered into this willingly, it is likely to be made into a consent order.
However, it does note that you can ask the Court to You can ask the Court to cancel the fee and will usually be waivered where applicants qualify for legal aid. It is unclear whether the Court would also waiver the fee if you are a higher net-worth individual.
Furthermore, the benefits of going further to get a consent order after you have completed certification of the separation agreement is that it becomes enforceable by the court and if one of you doesn’t do what was agreed in the Separation Agreement, the Family Court can make the person pay a bond or compensation.
On the justice website, it notes that “if the person still doesn’t follow the Order, then they may get charged with a crime and could be fined or jailed.” Moreover, this can add greater protection to you than just getting the Separation Agreement on its own.
Although this is legally valid and binding, the other party not complying may mean that you are left out of pocket to try to enforce this through the Family Court or mediation. Therefore, if you have a doubt as to whether your partner will follow through with the separation agreement terms, get a consent order!
A comparison of costs when you must mediate
In the event in which you cannot get a separation agreement, because you and your partner or spouse disagree on the terms of the separation agreement, there is also the option of going to mediation. Note that this is different to a Family Disputes Resolution, which is a process that is Court-mandated if you choose to go to the Family Court.
Mediation is an option for couples who have separated but cannot agree as to their terms. The following is an example of one of the disputes we have dealt with at Agreeable, and a comparison of the likely court costs in a similar case:
30-50k per party
95 working days
Approx. 24 months
Less than $10,000.00
While this is not was not in regard to a separation and relationship property issue, this does show that Agreeable’s online process can help to expediate getting a finalized and binding separation agreement.
Cost of a Separation Agreement with Agreeable?
It’s a fact of life that every couple and their agreement is going to be different. However, Agreeable strives to provide our clients with a fixed fee. This does mean that we need to estimate and negotiate any fixed fees with our lawyer’s prior certification. We price this based on our experience of the complexity (on a sliding scale from standard to complex) of your situation and agreement terms. For standard certifications where couples have one stand-alone Family Home which are splitting the sale of proceeds from, we usually charge $1500 plus GST.
However, this does not include situations where couples have complex arrangements dealing with the Family Home, or if couples have multiple properties or trusts, or business shares. There is a myriad of situations in which Agreeable’s standard agreement does not take into account. Therefore, a good indication that your situation is more complex than our standard situations will be whether you have needed to edit or add in clauses to your Separation Agreement.
This increases the costs of certification as our lawyers bill us for the time in which it takes them to prepare and then to conduct the certification – taking into account the legal advice they must give as part of the process. More complex assets or situations does mean more time needed in order to provide advice and to satisfactorily certify your separation agreement.
What can I expect to pay?
Most of our more complicated certifications for the Separation Agreement vary between $1500 – $2500 + GST, as an indication.
However, if for any reason your certification does not occur (one partner changes their mind last minute, or our lawyers advise the party not to sign as the terms are manifestly unfair), then Agreeable refunds the parties the fee paid less any costs already and reasonably incurred by our lawyers in preparing for and conducting the certification.
Can I get competing quotes from our own lawyers?
Yes. Agreeable does not have the exclusive right to certify your agreement and any party can use their own lawyers to certify. In other words, we think we provide a transparent fee and process in certifying.
Are there any on-going costs after separation?
You may need to get conveyancing or trust lawyers involved at this stage to deal with the execution of the terms of the separation agreement. For instance, you may need to change the name of the title on the property to one spouse, or you may need to get Deeds of Settlement drafted up if you have independent trustees which deal with your relationship property.
However, there are on-going costs that may arise out of your separation. For example, if you have children, you may have already detailed in your agreement how you will each contribute to child-care. In particular, child support becomes a topic of on-going costs.
Aside from child support, if your separation agreement deals with on-going maintenance where one party continues to support the other, these may also be the on-going costs involved. This could be in addition to any child support payable. It is also open to a spouse to apply to the Family Court for maintenance on top of child support so it is best to discuss this issue when you are getting the agreement.
What to do with your finances after you have separated
Sorted.org.nz have a guide on separation. This details a good step-by-step guide as to what you need to do in order to get your finances in order including:
Set up new bank account
Check your Credit Record and any debts are paid.
Update any rental agreements
Work out your net worth
Create a new budget after adjusting to a change in income
In addition, it is important that if you have any joint debts that you might want to ensure your name is not on these after you have paid off your share (or whatever the case may be).
Similarly, before signing onto a new lease, to take your name off a shared lease, else you could be jointly liable for your partner’s debts or if anything goes wrong on this rental property.
Does Agreeable accept Legal Aid applicants?
Unfortunately, Agreeable does not currently provide legal aid services for separation agreements or certifications for couples which fall within the legal aid system. However, it may be in your best interest to head to a local Community Law Centre. They are likely to have a directory of services or lawyers who are skilled in this area to help. They detail whether they can provide services to you here and if you are eligible, they will direct you to the right Legal Aid lawyer.
Another useful resource is the Citizens Advice Bureau which answers some questions relating to separations and divorces here. In short, although the cost of a separation agreement is never fixed, this article may be a definitive guide on what costs you should expect when separating.
When you separate, your relationship property assets are equally divided.
This is in the Property (Relationships) Act 1976 (“The Act”). To familiarise yourself with the fundamentals of the Act, refer to our article here
S 11 of the Act states that each spouse is entitled to equal shares in the:
Family Chattels (e.g. furniture, boat, and dog)
And any other classified relationship property
The above would apply if you have no contracting out or separation agreement. However, there are exemptions to the equal division assumption, such as:
Extraordinary circumstances that make equal sharing “repugnant to justice”;
A short marriage;
A short de facto relationship;
Economic disparity between the spouse after separation;
Two homes that qualify as the family home;
One spouse sustained or diminished the value of another spouse’s separate property; and
One spouse satisfied personal debts out of relationship property.
The Courts may find that equal sharing would create extreme injustice.
In cases like these, the courts will divide relationship property according to the contributions made by each spouse.
Here are some examples of extraordinary circumstances that are “repugnant to justice”:
Wife financially and emotionally supported the family and the husband was an alcoholic;
Wife financially supported and provided everything in the marriage, took care of the child and provided the funds for her husband for further studies. His earning capacity was greatly enhanced during this relationship as she was more established.
Factors that courts will consider when assessing exceptions
Was there a gross disparity of contributions during the relationship
The length of the relationship. The general rule is, the longer the relationship has been the more intermingled property becomes
Was there any negative contribution such as one spouse acting in fraud, deceit or forgery towards their spouse.
Gross misconduct of a spouse. This could include someone who is very abusive and they damaged the property in question
Factors courts will not consider
The circumstances after the spouses cease to live together. For example, if one spouse after separation assumes the responsibility of maintaining the house and paying for its outgoings. Or if one spouse deserts the family and fails to maintain for them
If one party owns the family home, this is not “extraordinary”.
Marriages of short duration
This is when spouses have lived together for less than three years. The division of property would be to each spouse’s contributions to the marriage if the assets were:
Wholly owned or substantially by one partner; or
Assets owned by one spouse through succession, survivorship, as a beneficiary, or as a gift; or
One spouse contributed to the marriage disproportionately than the other.
Any other property or assets that fall outside of the above will be dealt with by the equal division rule.
De Facto Relationships of Short Duration
If there has been a de facto relationship of short duration where the de facto partners have lived together for less than three years or the court deems it to be a de facto relationship of short duration, then the Act will not apply. The exception to this would be if:
There is a child in the de facto relationship
One spouse has made a significant contribution to the de facto relationship
Each share will be determined according to individual contributions.
This section applies if the courts decide:
After the relationship ends, the income of one spouse is likely to be higher; or
One spouse was better off due to their role during the relationship.
Factors that courts may have regard to when drawing this conclusion:
The likely earning capacity of each spouse
The responsibilities of each spouse for the ongoing care of children
Projected earnings of one spouse if they had scarified a career for the relationship
The enhanced earning capacity of one spouse because of their respective roles in the relationship
The age of each spouse
Two homes at the date when marriage or de facto relationship began
This applies during a relationship when each spouse owns a home that could be the family home. The courts will adjust the shares to relationship property to compensate for the inclusion of the home of only 1 spouse. This resolves any injustice that may have resulted.
As a result, this section is usually relevant for second marriages or ones that occur later in life where each spouse may own thier own house.
Sustained or diminished value of separate property
Sustenance is when one spouse’s property has been maintained by relationship property.
Large amounts of cases under this exception are related to farms. An example is where one spouse owns a farm that is separate property, but the non-owning spouse maintains the farm.
A Court will award compensation or displace equal sharing for this. But calculations in the past for this has been quite conservative.
Diminution is where separate property has been “materially diminished” in value by the one spouse’s actions. Courts may decide to diminish the shares of the other spouse as compensation.
Personal Debt satisfied out of Relationship Property
If one spouse satisfies their debts from the relationship property, the other may be compensated either by:
A greater share in relationship property; or
Some of the other spouse’s separate property is treated as relationship property; or
An order for one spouse to pay the other.
Talk to one of the Agreeable team today to see whether your situation fits one of the above.