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 Home
- 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.
This article was written by Ashley Yuan.
What are trusts and how do they apply to relationship property?
Firstly, even if you established the Trust, but your partner contributed to the assets, the Trust will not necessarily be separate property. This is true even if a third party established the Trust.
To clarify, this means that Trusts are not an absolute protection against relationship property. This will be determined using the standard test in relationship property laws.
Certainly a partner will have no interest in a trust unless you are a beneficiary of the trust or the trustees have given you a legal interest in the trust.
In other words, if you and or your partner have a vested or contingent interest in a trust, that interest will be sufficient to qualify as property under relationship property laws.
Relationship property laws make provision for some possible claims by the non-owning partner against these interests. So even if a distribution is classified as being your separate property, this may not necessarily protect you from claims.
If you are unsure whether you or your partner has a legal interest in the trust, talk to a lawyer. Alternatively, contact Agreeable and we may be able to help.
How does the current law deal with trusts?
At the moment, it is clear that simply owning assets in a trust is not an absolute bar from claims. However, if a trust is involved the Family Court has limited jurisdiction, and can refer matters to the High Court. But this can be an expensive and time-consuming process.
The law expressly allows for the trust-owned house to be included in some situations, such as:
- If the house was transferred to the trust when the couple were in a relationship;
- Even if the property was already in a family trust before the relationship commenced, if a loan is secured over the property and a partner made repayments;
- If one party contributed to the “improvement” of the home, then they may have an ability to claim against the trust.
In addition, there may be other situations in which a Trust does not separate your property from relationship property.
What is changing?
In 2019, the Law Commission will suggest reforms
to the relationship property laws in New Zealand which have not changed for
over 40 years. In terms of trust, this may include allowing the Court to have
wider powers with regard to the sharing of trust property.
Therefore, before entering into a relationship, entering into a relationship property agreement recording the manner in which you seek to have your property divided in the event of separation, will be important.