What is a Prenup?

What is a Prenup?

A ‘prenup’ is a prenuptial agreement, commonly referred to as ‘contracting out’. Prenups exist to enable partners to opt-out of the equal sharing of relationship property under the Property (Relationships) Act should the relationship or marriage end. These premarital agreements define relationship property, separate property, and property division in the event of a divorce, separation, or death. Such agreements outline each party’s responsibilities and property rights for the duration of the relationship. Many couples wonder whether they should get a prenuptial agreement. Depending on your situation, we think this is a good idea.

Prenups are growing in popularity in New Zealand, showing that more and more couples consider it normal.

The broad definition of ‘relationship property’ means you could be sharing your financial assets with your long-term partner. Premarital property owned before entering the relationship could become relationship property. This might be a house that you bought 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 the assets you brought into the relationship separate, you should organise a prenuptial agreement. Any property acquired during the relationship is considered marital property or community property. If you’re planning to marry, a prenuptial agreement is only valid if it is completed prior to marriage. Once you’re married, the assets of both parties could be considered marital assets.

When should you get a prenup?

The Property (Relationships) Act 1976 applies once the parties have been in a qualifying relationship, and you should try to get the prenup done well before your relationship becomes a qualifying one.

These are usually a marriage, a civil union or a de facto partnership for three years. A qualifying relationship under the Act has its own definition.

Factors for a qualifying relationship might include:

  • How long you have been in the 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 has lived together for three years. But it might not be necessary to have lived together for this long or to have a joint bank account to be deemed a couple.

Most noteworthy, in the case of Scragg v Scott [2006] NZFLR 1076, the parties only lived together for short periods because of Mr. Scragg’s overseas work.

Therefore no continuous joint living period occurred of more than nine months. Accordingly, 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 the Act. The Judge considered the mental aspect described as “a commitment to a continuing future relationship.”

What if you live separately from your partner?

You might still be in a de facto relationship if you live in separate houses and don’t have share finances or a joint account.

Similarly, the High Court in Moon v Public Trust and Anor [2018] 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 prenuptial agreement if you are in a de facto relationship?

Agreeable recommends getting your own prenup agreement within the first three years of the relationship. The longer you leave it, the greater the risk, the more complicated the prenup conversation – and the more expensive it could eventually be.

What is the process for prenuptial agreements?

The drafting process begins with outlining a couple’s finances and assets. To prepare, you might like to read about what you should consider on separating.

You and your partner must seek legal counsel with separate lawyers who understand contract law. This is called the “certification process” and Agreeable specialises in helping with this.

During the certification, your lawyer will clarify your financial rights, legal rights, and personal consequences of the prenuptial contract. The lawyer will also need to determine whether the agreement is legally sound, considered fair, and that the two parties did not enter into it under duress or undue influence.

You might be entitled to more under the Act, and your lawyer will let you know once they fully understand your situation.

Ready to get a prenup?

Agreeable has helped hundreds of Kiwis with getting their prenuptial agreements through a simple and trustworthy online process. You can purchase a prenup with Agreeable here for $350. After answering some questions, you’ll have your automatically-generated prenuptial agreement today. Then, we can also find you a lawyer to certify your written prenup agreement.

Certifying the prenup agreement makes it valid and legally binding. Therefore, don’t skip this step. The prenup cost may set you back a bit upfront, but not getting a prenup could cost you much more down the track.

It takes time or large networks to find a lawyer, which can be a barrier for busy people. That’s why Agreeable has a panel of lawyers that are relationship property experts. In addition, because we provide this service online, our rates are more affordable.

Ready for certification?

If you have the agreement above, and are ready to certify, click here or get in touch with one of Agreeable team. You can email us at info@agreeable.co.nz or fill in our contact form.

What Is A Contracting Out Agreement? 10 Things to Know

A contracting out agreement is also known as a prenuptial agreement (prenup) or a relationship property agreement. A prenup is a contract between partners that states who owns what and how to divide up a couple’s property, or assets, in the event of separation.

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 1976 (the ‘Act’). The Act allows couples to enter into a private agreement and details how the Family Court might divvy up shared assets.

This prenuptial agreement is for couples or parties intending to enter into a relationship with significant assets, which may be relationship property. Remember – your agreement will not work (it won’t be legally binding) if you do it yourself and it doesn’t comply with the formal requirements. 

If you are already in a relationship and looking to separate, you can find more information about separation agreements here.

How might the Court split our relationship property?

A Court will try to balance the division of property between couples. However, the Court recognises that there might be unequal bargaining power between couples, so the Act encourages couples to decide how to divide relationship property. This means you both choose how you want to separate your assets if your relationship ends.

When can I create a contracting out agreement?

Usually, couples will get contracting out agreements when they enter a new relationship, de facto relationship, or are considering marriage or a civil union.

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?

The parties will need an agreement in writing, and each party will need to receive independent legal advice on the written agreement. It must be signed by both parties and certified by their independent lawyers indicating they have advised on the implications of the agreement. 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 get a contracting out agreement. As this process is voluntary, both parties must be committed.

A common issue with contracting out agreements is that one party may be unaware they are giving away their rights without understanding the consequences of signing the agreement, or what they are entitled to under the Act. The certification system prevents such misunderstandings.

When seeking independent legal advice, the lawyer must advise you whether to sign the agreement or not, or they may suggest better terms. Then, the lawyer witnesses each party’s signature and certifies that they have clarified the effects and implications of the agreement. They will also certify that the contract appears fair. Fair doesn’t necessarily mean 50/50, but it needs to show that it is not a “serious injustice”.

How do I make sure our contracting out agreement is fair?

The Property Relationships Act 1976 also attempts to prevent one partner from entering an agreement if there is evidence of undue influence from the other partner.

A court can set aside a contracting out agreement even if it satisfies the criteria under the Act. This occurs where, having regard to all the circumstances, the court believes the agreement would cause serious injustice. The Court will consider:

  • 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 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 family or friends for their opinion of your agreement terms. Contracting out agreements aren’t an ironclad guarantee. However, they will help provide certainty and reassurance. This will save you time and money should there be a dispute over assets in the event of a separation (or death).

Closeup of a couple signing a contracting out agreement.
Contracting out agreements could save you time and money in the long run in the event of a separation

I brought ‘x’ into our relationship. When does our separate property become relationship property?

If one party brings significantly more assets to the relationship, both parties will have to define what assets could be classified as separate property and ‘relationship property‘. The Courts will recognise if the non-owning party contributes to any increase in value of the other partner’s separate property. This increase is deemed ‘relationship property’ and thus subject to equal sharing.

The general rule for separate property is that it remains the property of the partner who owns it and does not have to be divided when the relationship ends. For example, gifts, property acquired while not together, increases in separate property value, and any income derived. Separate property can become relationship property if used for family purposes. 

Note that this may include indirect contributions too. Contributions do not have to be financial ones. For example, looking after the family home or children can be deemed a contributing factor. The Courts will take this into account when determining the 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 outdated 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?

Undoubtedly, children can add complexity to your agreement – and the relationship. If you plan to start a family, our lawyers will advise whether this is a factor to consider. 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 care for the children.

We have agreed on what’s mine etc. – what’s next?

Each party will need the contracting out agreement certified by an independent lawyer. Agreeable provides this service with an affordable fee to make it as simple, stress-free, and predictable as possible for you and your partner. However, our lawyers are independent, which 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 to determine whether a contracting out agreement suits your specific circumstances. We also have the option of our lawyers providing you with tailored legal services. Please enquire with us about your relationship property issues. We will see how we can help.

Click here to find out more about how Agreeable can help you to create an agreement.

The government is doing new things for housing – so are we!

The government is doing new things for housing – so are we!

Yesterday morning the Government announced a nearly $4 billion package that includes increased support for first-home buyers and aims to make buying your first home that little bit easier. Coincidentally, Agreeable is trying to do the same thing! In the coming months, we will be launching a Deed of Debt and a Deed of Gift that will help you make your home-buying experience simpler.

We talk to a lot of first home buyers who want to document how their new home will be split between them and their partner. We also hear from nervous parents who say “I’m lending my child money for a house deposit. How do I protect myself and make sure things don’t go topsy turvy if my child and their partner split up?”.

So far, the answer to this has included 1) ensure the lucky new home buyers get a relationship property agreement, and 2) think about documenting the loan! Until now, we’ve mainly helped with the first bit, but with our new Deeds of Debt and/or Gift, we’ll be helping you document a loan or a gift as well (and we can ensure that the agreement links up with the Deed – no loopholes!).

The Government is hoping that its new package will result in more houses being affordable. The key changes include increasing the bright line test to 10 years, staggered removal of interest deductions and lifting the First Home Grant caps.

But what if you’re still looking to get your deposit (or part of it) from somewhere else? We know that coming up with a house deposit can still be tricky. That’s why we commonly see people getting gifts or loans from family to help them make that big purchase. In the coming months, we will be launching our Deeds of Debt and Gift, to help make the loan/gift process more straightforward.

Getting a loan from the bank of mum and dad? Document it using our Deed of Debt! Receiving a gift from a kind friend who wants you to “settle down”? Document it with a Deed of Gift! Soon you will be able to access Agreeable’s user friendly document automation tools to create your own Deed, to suit your own circumstances. As always, our friendly team will be on hand to help, and our expert lawyers will be on standby in case you need legal advice. Watch this space!

Please note: Agreeable does not provide legal advice, but we provide online access to lawyers who do. If you require legal advice, please get in touch with us.

Separation Agreements and the family home

Separation Agreements and the family home

It goes without saying that separating from your partner is often a difficult experience. There is a lot to figure out, particularly when you have been together for a long time. Central to what needs to be figured out is what you are going to do with the family home – in most cases, a couple’s largest asset.

We have found that the most common way to deal with the family home is for one person to buy the other’s persons share of the home – in other words, for one of you to “buy the other out”. Under NZ’s relationship property laws (found in the Property (Relationships) Act), the family home is usually split 50/50. However, often one person has put more money into the deposit (and didn’t think to get a prenup) or one person has contributed more to the mortgage.

In those situations, the couple might then verbally agree how much one will pay the other for the house. To them, the verbal agreement is simple, easy and they know where they stand. Unfortunately, for them either the bank (or, perhaps, the bank of mum and dad) want the agreement in writing. This is where a separation agreement comes in.

Suddenly, what seemed to be an amicable and simple split can become a rabbit hole of confusion.

Where do we get one? How much will it cost? What is involved? Do I have to see a lawyer? What if they want us to change our agreement?

 

This is where Agreeable comes in.

Agreeable takes the niggle out of getting a separation agreement. We offer a template for parties to make their own written agreement at a fraction of the cost of getting a bespoke agreement from a lawyer. Two independent lawyers can also then be provided to certify the agreement (which makes it legally binding) at a fixed price. Best of all, the entire process can be completed online.

Our goal is to give the written separation agreement a simple and easy feel – just like when the parties verbally agreed. We work with parties to help them understand what is required, how much it will cost and what is involved.

If you have recently separated from your partner (or are about to buy a house with your partner), send us an email and we will help you figure out what your situation requires. Separating is hard enough, it doesn’t need to become a scary legal battle too. We’re here to help make everything a little bit more… agreeable.

Please note: Agreeable does not provide legal advice, but we provide online access to lawyers who do. If you require legal advice, please get in touch with us.

Is your business safe from relationship property claims?

Is your business safe from relationship property claims?

​The short answer is no.

A quick Google will let you know that there are several ways business assets can be exposed to relationship property claims. Claims can be made for a share of your business assets by your spouse or partner after you separate. That means it is important to protect your business. Give yourself – and your business partners – certainty that a change in your relationship status won’t have adverse outcomes for the business.

 

How do you protect your business assets?

Take the safe route, get a prenup! Outline exactly how you want your property to be divided. You can choose to specify how the business assets will be divided, or even simply that the business remains separate property.

 

How can Agreeable help?

Our goal is to make the process of getting a prenup easy. It’s all done online, without the need to even leave your home! We provide a DIY prenup for $350.00 with expert assistance to help you along the way. We also provide two lawyers at a fixed price who can make the agreement legally binding. Find out more about our Relationship Property Agreement or contact us with any questions you may have.

 

Things to remember:

  • Relationship property is not all about the family home or furniture. It is important for you to understand how YOUR business assets can be susceptible to relationship property claims. If in doubt, get legal advice, we have a team of experts who can help!
  • Trusts will not always protect your business from relationship property claims. Again, if in doubt, get legal advice, again, we can help, get in touch with us!
  • It is important to ensure any prenup is fair, as the court can overturn agreements which result in “serious injustice”.
 

Your business assets can be exposed to a relationship property claim. Protect your business, get a prenup!

Create a relationship property agreement online

Dividing your assets in a separation

Dividing your assets in a separation

What happens to the bach, the boat and your superannuation?

It is no secret that when married couples and de facto partners separate, each individual is typically entitled to a 50% share of all relationship property under the Property (Relationships) Act.

What you and your partner may not realise is that your superannuation falls within the definition of relationship property. Given the Law Commission has identified that superannuation, second to the house, can be one of your most significant assets it is important to know how it may be divided if you and your partner separate.1

 

So how and why is your ex entitled your superannuation fund?

It may seem counterintuitive that your ex could benefit from a superannuation fund that you, yourself, cannot touch until you reach the age of 65. The good news is that property acquired before your relationship is usually treated as separate and will not form part of the divisible superannuation amount. However, the current law says that any increase to your superannuation during your relationship will be divided equally – irrespective of who contributed the funds.

In the event that you do have to give your ex a percentage of your superannuation the process is not as simple as transferring the money from your superannuation to theirs. The most common arrangement involves handing over another asset that is equal in value, such as a lump sum of cash, the boat, or a greater share in the house.

If your pool of relationship property is not large enough to hand over a lump sum, a loan may be an appropriate alternative.

That said, where neither of the above is an option, the court can make an order directly to the manager of your scheme to release the superannuation funds.

 

The effects of COVID-19

One of the effects of Covid-19 was the plummet of superannuation fund balances, leaving many funds worth far less than their pre-COVID-19 value. In valuing personal property, the court assesses the amount owed at the date of separation. If you and your partner separated pre-COVID-19, this could have a significant impact on the amount of your super that your ex is entitled to. The expected percentage of your superannuation payable to your partner may reflect an amount of money that no longer exists.

 

How we can help

Separations are stressful enough, and going to court can add a costly and timely burden. COVID-19 is expected to lead to a spike in separations, exacerbated by lockdown, forcing family tensions to bubble to the surface.

If you’ve separated and need to take care of your assets, our Separation Agreement can help. On the other hand, if you’re entering or already in a relationship, a prenup (Relationship Property Agreement (RPA)) can help provide certainty for the future. Asking your partner for an RPA may not be the most romantic gesture in the world but, in all this uncertainty, there has never been a better time to secure your assets.

Ultimately, our law means that you are entitled to make your own decisions about how to divide your assets. Therefore, instead of leaving it to the Act and the courts to split up what is yours, a prenup or separation agreement is an efficient and cost-effective option.

 


Disclaimer: Any information we provide is general information. Please do not rely on the contents of this article as legal advice. Agreeable is not a law firm or a substitute for a lawyer.

1Law Commission Review of the Property (Relationships) Act 1976 (NZLC R143) at 15.43.

Create a separation agreement online

4 common reasons people get a separation agreement

There are many reasons couples get a separation agreement but the below are the top four common reasons we get approached for our service.

 

1. The bank told you to get one

More and more it seems people contact us because they need to get a separation agreement before the bank will take someone off the mortgage.

 

2. The boat, the car, or the motorbike?

Not much more to say, except no one wants a sharing arrangement for their vehicle.

 

3. Debt

The last thing you want to be doing is paying off your ex’s student loan.

 

4. Trusts

Sort out that thing you put your property into and don’t really know much else about it, except now you want your property back out.

 

Rental properties, savings, your favourite couch, whatever it is, there are things you want to make sure you keep when you separate.

 

Separating is already a difficult process and the thought of involving lawyers only adds more stress. Where do we even start? Lawyers are expensive, how much will it cost? We know what is ours, why do I need a lawyer complicating it? How long will it take?

Well Agreeable is here to make the process easy for you. Whether the bank is making you get one, or you want one for any of the above reasons, we are here to help.

 

How can Agreeable help?

  1. For $350.00 you can purchase a separation agreement (here). The software will lead you step-by-step through creating your own agreement.
  2. Once completed, we will work with you make sure the agreement is in the best shape possible!
  3. We arrange two independent lawyers to certify your agreement (make it legally binding).

We can complete the process in 10 days from payment. The cost for certification will be a fixed price quoted to you prior to proceeding (see the pricing structure below).

If you need any further information, enquire now!

 

Pricing structure for Certification/Advice (incl. price for two independent lawyers). See what you might expect to pay when you certify your separation agreement through Agreeable*

Basic

$1,500 + GST

 

Our Basic package is best for dividing assets and liabilities like:

  • A family home
  • Vehicles
  • KiwiSaver and superannuation
  • Cash accounts
  • Pets
  • Family chattels (such as boats, furniture, jewellery, etc)

Moderate

$1,750 + GST

 

Your agreement will be Moderate if you’ve got some more sophisticated assets or you need legal input to ensure the agreement is effective in your particular circumstances. In addition to the assets included in the basic agreement, there will likely be some of the following:

  • Businesses,
  • Rental properties,
  • Adjustment payments (where one party pays the other to compensate for an unfair asset divide)
  • Trusts*
  • Unfairness between what each party ends up with following separation

*If you have a trust, we will work closely with you to find the best course of action and cost. Depending on the trust arrangements required, the agreement could be a Complex rather than Moderate one.

Complex

$X,000 + GST

 

The price for a Complex agreement is difficult to estimate, but Agreeable will either provide a quote or help facilitate an ongoing arrangement between lawyers and clients.

A Complex agreement is likely one where a significant amount of money is being divided, large businesses, complex trusts or businesses alongside the other factors already included in the Basic and Moderate packages.

Create a separation agreement online

Buy out: Selling Property after Separating

Can you still keep, or get rid of, your family home or investment properties after you separate? Of course!

 

Need a Separation Agreement? Click here to get started on yours with Agreeable.

 

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.

  1. Get legal advice
  2. Get valuation on the family home or properties to be divided
  3. Agree on your partner’s “buy-out price”
  4. Get a separation agreement certified. This is legal and binding on both of you rather than just a “hand-shake” deal with risks!
  5. 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.

 

Buy Out Divorce Separation
The Family Home is relationship property and after a divorce, you may be thinking about buying out your partner’s share to keep it.

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.

Valuation

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.

Online sources

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.

Best alternative

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.

Cost of a Separation Agreement

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.

Can I write my own separation agreement?

It is not recommended and in our opinion, it’s not a risking worth taking. Writing your own separation agreement can lead to difficulties in receiving proper, independent legal advice if the agreement is not comprehensive and recognised by your lawyer. We recommend purchasing our separation agreement template which is supported and understood by trusted family lawyers in New Zealand.

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:

  Agreeable Court
Legal Fees $0 30-50k per party
Time Taken 95 working days Approx. 24 months
Total Cost Less than $10,000.00 Approx. $100,000.00

While this 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:

  1. Set up new bank account
  2. Check your Credit Record and any debts are paid.
  3. Update any rental agreements
  4. Work out your net worth
  5. 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.

Separation Agreement: Things to Include to Protect Your Finances

Separation Agreement: Things to Include to Protect Your Finances

Introduction: the Separation Agreement

If you are separating out of a marriage or de-facto relationship, or getting a divorce, you should consider getting a separation agreement.  Other than Court, it is the only valid way of dividing relationship property once a relationship ends.   Some people do this process informally, however, this can result in arguments and Court down the line.

But going to court can be very costly. While the relationship is still on good terms, you might want to negotiate a separation agreement.

You might like to refresh your knowledge of what Relationship Property means before you continue reading this article. Essentially, your separation agreement allows you to dictate how your assets will be divided.  If you get a valid separation agreement, this will override the provisions of the Property (Relationships) Act 1976. But in order for it to be legally binding on both parties, the Separation Agreement must be:

  • In writing;
  • Signed by both parties;
  • Following independent legal advice; and
  • A lawyer has to sign and witnesses your signing. This lawyer also certifies that they explained the effect and implications of the agreement to you.
  • Similarly, your partner will also need an independent lawyer doing the same certification.

What you can expect in our Separation Agreement ‘template’:

Our Agreeable separation agreement includes aspects such as:

  • The relevant dates of the relationship (when you were married or started living together, when you separated);
  • What will happen with the family home and any mortgage on it;
  • What will happen with the chattels, furniture;
  • Any bank accounts and what is to happen with those;
  • Motor vehicles and who gets what;
  • Kiwisaver and superannuation;
  • Debts – who is liable for those;
  • Any adjustments to be made or adjustment payments to make;
  • Administrative clauses, such as the requirement to make complete disclosure and to execute any necessary documents;
  • That each party has taken independent legal advice on the implications and effects of the Agreement;
  • Costs – normally each party pays their own costs and shares the cost of the agreement and certification; and
  • Witnessing by Audio-Visual communication (agreeing that this is effective).

Things to include in your Separation Agreement

If you are married or in a civil union with your partner and you later decide to apply for a divorce, you can also use the separation agreement as evidence that you have been apart for 2 years. It is necessary to show that you’ve lived apart for two years before you can apply for a divorce.

Before you go ahead and purchase Agreeable’s Separation Agreement, here are some key things most couples think about when they get a separation agreement.

 

The Family Home

One of the main assets couples own is the home. You could also have jointly-owned chattels. Think about your family car, household furniture and other ‘big ticket’ items.

Regardless of who paid for the Family Home, it will usually be relationship property.

When you separate, you can sell the main Family Home. The sale will be divided in half and shared between you and your partner. Otherwise, one party may keep the house and buy the other  partner out. This might be desirable if you have children to consider.

In the Family Court, the judge guides their decision by general principles. You might like to think about these principles when dividing your own relationship property:

  • That since each partner has contributed equally to the relationship, the assets will be shared equally too i.e. split in half
  • The Court won’t look at who is ‘at fault’ for breaking up the relationship
  • Unpaid domestic work has equal value to economic work

However, your separation agreement does not have to divide your assets in this way. If you are purchasing a separation agreement and then seeking your partner’s approval, you can show them that you have thought about fair terms.

 

What about Separate Property?

But you and your partner may also have other assets which are not relationship property.

An example is other investment home(s) which are not the Family Home. This could be ‘separate property’ which does not come under the Relationship Property Act if it can be determined to not be relationship property. Separate property remains the property of the partner who owns it.

Situations can get complicated. For example, sometimes both partners own a home capable of becoming the family home. Generally, when relationship property is to be divided, the home of only one partner will be considered the main Family Home.

Separate property can include property one partner got while they were not living together as a couple. Or it can be property that a partner acquires from another such as an inheritance (unless this property gets mixed with relationship property). If you need legal advice on your individual circumstances, Agreeable can help you find Family Law experts.

Child-Care Arrangements

If you have children from your relationship to consider, our Separation Agreement, does allow you to detail what your day to day care and contact of your children will be, access and other major decisions regarding the upbringing of your child or children if they are still minors.

The court will only be concerned only with what is in the best interests of the children when they consider child-care arrangements.

 

Your own or your partner’s debt

You or your partner can be liable for any personal debts (even if they are solely in your partner’s name) if they are considered relationship debts. Relationship debt includes any joint debts or debt that is solely in your partner’s name if:

  • the debt was related to the relationship property. For example you used it to get a loan on a car you both used, or for a business you both benefited from;
  • the debt was for the benefit of both partners. For example rent, debt to buy furniture;
  • the debt is the result of the cost of bringing up any children you have together.

You can deal with how to divide up any joint debts or whether one party takes these debts over and provides an indemnity for that party not taking over the debt.

Think about your current credit card debts, any remaining hire purchases, student loans etc.  Your lawyer will ask for more information if there is not enough details in your separation agreement. We recommend you spend some time listing these out with your partner.

 

What about Kiwisaver?

If you have contributed to Kiwisaver after your relationship started, or another employment scheme such as the Police Superannuation or other government scheme, then you need to share this amount with your partner when you separate.

Generally, this will be split in half. Your certifying lawyer will need to see proof of the value of your Kiwisaver – unless it is only a small amount.

You can withdraw your Kiwisaver on the grounds of significant financial hardship and serious illness. Your Kiwisaver scheme manager will need to be reasonably satisfied that you or your partner is suffering or is likely to suffer significant financial hardship. Then you can make a significant financial hardship withdrawal. Significant financial hardship includes significant financial difficulties which can come up after separation.

 

Finally, is your agreement fair?

If you do have to go to court, it is likely that the judge will determine whether:

  • the agreement is fair;
  • you both worked on the agreement without pressure and entered into it freely;
  • it covers all your assets after full disclosure.

The extent to which a judge will stay with your agreement reflects the level of his acceptance of the above three points.

If one of you is in breach of the deed of separation and the other goes to court to enforce it, the judge can alter the terms of the agreement.

A separation agreement is useful in so many ways. It allows for certainty, it ensures your separate property stays your separate property, and probably most importantly, it helps to give parties closure.  

Buy your Separation Agreement now

People are increasingly turning online to meet their everyday needs. Technology can make this a more satisfying, efficient and easier process. This is exactly the aim of Agreeable, an online dispute resolution platform and service.

Agreeable offers the following ‘DIY’ services and steps so that you can move on:

  1. Purchase our agreement. It will automatically generate your tailor-made agreement.
  2. Contact us to certify your document with our expert Family Lawyers.
  3. Go ahead and put the terms of your agreement into action if needed.

Things such as Family Trusts and businesses can make your situation more complicated.  Please talk to one of us at the Agreeable team about your situation.

If you have a dispute over relationship property, Agreeable can also help you resolve this if both parties are willing to negotiate or arbitrate. Otherwise you can consider what your options are with our Family Law experts. Please contact us on what your next steps may be.

Disclaimer: Any information we provide is general information. Please do not rely on the contents of this article as legal advice. Agreeable is not a law firm or a substitute for a law firm.