Reaching resolution: Saunders & Co
Relationship separations are challenging for many different reasons. They are especially difficult emotionally, as anyone who has been through one could tell you.
Amidst heightened emotions and stress, there is a lot that needs to be worked through, especially regarding the division of relationship property.
Before formalising the division of assets and the end of a relationship, each party must seek independent legal advice.
This means that the parties cannot see the same lawyer or even two lawyers from the same firm. Without such advice, any agreement made will not be binding.
In New Zealand, when a couple separates the only way to ensure finality is to enter into a legally binding document provided for under the Property (Relationships) Act 1976, often referred to as a ‘separation agreement’.
It is common for banks to make finance conditional on entering into such an agreement.
Generally, for married couples, or those in a de facto relationship, legislation provides for an equal split of the relationship property regardless of the monetary contributions.
However, there are a number of provisions in the legislation that allows for adjustments to the equal sharing rules. One way to avoid the stress of messy negotiations after the end of a relationship is to enter into an agreement during the relationship. This is known as a contracting out agreement, or pre-nuptial agreement.
Generally, a contracting out agreement can be likened to an insurance policy; you hope your house won’t burn down but you insure it anyway. Entering into a contracting out agreement during the early stages of a relationship gives peace of mind to know you are protected if the relationship does not work out.
A contracting out agreement is drafted during the relationship, at a time when the parties are communicating well, rather than attempting to reach a resolution after separation, when emotions can be running high.
Having the right lawyer guiding you through what can feel like a complicated and stressful process is key.
Julia Johnston from Saunders & Co, partner in charge of the Wigram office, has plenty of experience in this area. When relationships include business assets, then you will also need advice from your accountant and possibly a valuation specialist.
GST and income tax implications are something to be wary of, and if your accountant is not a tax specialist, Julia can add unique value as an experienced tax lawyer, without the need to get a further advisor involved.
Julia and her team pride themselves in being open with their clients, so that they know what to expect from the process and the timelines involved.
“You are doing it for a reason and want it to be valid. Part of my approach is to explain to clients what the process looks like upfront. I give them all the information they need, and an idea of how long things can take.”
If you need assistance with your contracting out or separation agreement, contact Julia or anyone in the Saunders & Co relationship property team to help guide you through the process.
www.saunders.co.nz
