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.

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.

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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