Rebecca had always been frugal. She and her husband, Brian, had scrimped and saved hard for everything they had. Where possible, they preferred to DIY as much as possible. This included avoiding legal costs.
Rebecca had been referred to me because she and Brian had separated and things were a bit of a mess.
When they met, Rebecca owned a home which she had bought her previous husband out of. She loved this home and although the mortgage payments were a struggle, she felt it was worth it to provide a family home for her young children. When she met Brian, he didn’t have any personal assets. He had a family trust which owned some investments which largely ticked along. The trust was for Brian’s children’s benefit. Brian moved into Rebecca’s home and they worked hard to pay down the mortgage.
I asked Rebecca whether she and Brian had completed a contracting out agreement to set out how their property was to be divided if they separated. Rebecca explained to me that she had trusted Brian completely and besides, she didn’t want to spend money on lawyers for something she was sure (at the time) would never happen.
Brian was now claiming half the home.
One of the reasons Rebecca and Brian had separated was due to the stress of financial issues within the Pomegranate business they established during their marriage. It had been Brian’s idea and Rebecca felt she really got dragged into it. Having said that, she enjoyed working in the business together with Brian. She felt they were a good team, trying to build this investment for their future. Things hadn’t been going well with the business recently, largely due to a particularly cold winter coupled with Brian being ill and unable to carry out some of the heavier labour required.
Brian borrowed $60,000 to prop the business up. He needed Rebecca to sign documents for the loan. She wasn’t happy about this and certainly didn’t want any borrowing that may threaten the family home. Brian assured her this wouldn’t happen and that the home was safe. Rebecca thought perhaps she should see a lawyer but she explained to me that she didn’t want to spend money on lawyer’s fees especially when money was already tight. Besides, she trusted Brian and he went as far as to write down on a piece of paper that should anything happen in their relationship, he alone would take responsibility for the loan.
Brian was now claiming that Rebecca should be liable for half the loan as it related to their family business. To make matters worse, he has told Rebecca there is a caveat against the home to secure the loan.
Shortly after the loan, Rebecca and Brian separated. Rebecca didn’t want to spend money on legal costs so she set about negotiating their property division directly with Brian. Rebecca desperately wanted to keep the family home. She got a valuation and arranged finance so she could pay Brian the price he had said he would consider. Brian then told her he had changed his mind. They kept trying to negotiate together and now some months had passed. The property market had increased considerably and the house value increased by another $80,000. The higher value of the home meant Rebecca could no longer afford to buy Brian out of the home.
At that point, she decided she needs the assistance of a lawyer to help her resolve things.
After meeting with Rebecca, I pondered the “cost” of her having “saved” on legal fees in the past. Ideally, Rebecca would previously have had a lawyer:
- assist her to complete a contracting out agreement between her and Brian when they began living together. This could have preserved the home (or at least Rebecca’s initial interest in it) as her separate property. Instead, the law treats it as the family home which is to be equally divided. This has cost her $500,000.
- advise her about the loan being incurred and how to create a legally enforceable agreement so Brian takes sole responsibility for paying the loan back. This has cost her $30,000.00.
- assist her in early negotiations after separation and properly documenting the initial agreement for Rebecca to buy the home. The $80,000 increase in the house price has cost her the opportunity to keep her beloved home for her and her kids – for the sake of saving a few thousand in legal costs.
Her “savings” on legal fees over the years of probably less than $10,000, has cost Rebecca $530,000 in the divorce and the ability to keeping her beloved home.
I get it. Who wants to spend money on a lawyer, especially if money is tight. Legal costs are often a grudge purchase in the same way as a trip to the dentist is. However, just as spending a little on getting a filling now will save you pain and thousands on a later root canal, spending a little on good legal advice up front can save you a considerable sum later.
For help finding a cost effective solution to your family law issue, give us a call at Family Law Results on 09 297 2010 or email us at firstname.lastname@example.org.
Ngaire was one unhappy woman. Her friend had warned her that she was about to lose half her carefully squirelled away Kiwisaver and superannuation funds to her husband, Greg. Greg and Ngaire had recently separated, a decision largely driven by Ngaire because she couldn’t carry on living with Greg’s “irresponsibility” any longer.
Ngaire had married Greg 5 years ago after a very whirlwind relationship. It was all quite a rush for Ngaire at the time. She was 45 years old when they met. Long before that she had watched friends marry and have families and had come to a level of acceptance that perhaps this wasn’t going to happen for her. So, meeting Greg was a pleasant and exciting surprise to Ngaire.
Ngaire, being keenly aware of her single status and need to financially provide for herself, was quite the planner and relatively conservative in her spending habits. Greg, on the other hand, was spontaneous and adventurous. Ngaire found his “it’ll be right, live for the day” approach to life intoxicating and exciting at first but, as time wore on, it began to wear thin and became a source of conflict for them. She now regards their early relationship as “a period of temporary insanity” for her.
Ngaire was a great saver. She had a solid sum already saved in her superannuation scheme when she met Greg. As soon as Kiwisaver was introduced, she joined and made the maximum contributions she could so there was a nice amount there too. On the other hand, Greg had little savings and no superannuation or Kiwisaver when they met. After they married, Ngaire managed to get Greg on board with Kiwisaver but he only ever made the minimum contribution from his wages as he felt it important to have money to spend on life’s pleasures as well.
Ultimately, Ngaire found it just too hard “living on the edge” from one adventure to another with Greg and she moved from their home. She thought they had come to relatively amicable agreements over a coffee together about dividing the home, their bank accounts and the chattels and that they were sorted. However, at a BBQ the other night, her friend announced that superannuation and Kiwisaver were also relationship property to be divided. This sent Ngaire scurrying to see me in a panic. All Ngaire could see was her years of careful spending and saving for her retirement (while Greg was “off having fun, being irresponsible”) being all for nothing if Greg could walk off with half of it. She was particularly appalled at the prospect of him “frittering it all away” on travel and mountain biking gear.
I first checked whether Ngaire, being the financially risk averse person she is, had entered into a contracting out (pre nup) agreement with Greg. This may have preserved her retirement savings as her own property should they separate. No such luck – so giddy with the romance of it all, Ngaire really didn’t feel one was needed and besides, getting Greg to a lawyer would have been almost impossible.
So, what was to happen to Ngaire’s superannuation and the Kiwisaver she and Greg had?
Ngaire’s friend was partly right.
Relationship property law treats superannuation and Kiwisaver funds as relationship property that to be divided equally between both spouses. Ngaire was beside herself – she had significantly more in her Kiwisaver and superannuation than Greg did because of the contributions she had made before they met!
However, all was not lost. The law recognises that often superannuation savings may have been in place before the relationship. In such cases, the relationship property amount that is to be divided is limited to the portion of the superannuation’s value that is attributable to the relationship. With an actuary’s help we were able to calculate what portion was attributable to Ngaire’s pre-marriage savings and what portion related to the marriage. It was still a bitter pill for Ngaire to swallow that her higher dedication to saving for retirement during the marriage was going to benefit Greg. After some discussion, she recognised that during the marriage she had benefitted from his income that was spent on their adventures and travel and ultimately she was relieved that her pre marriage retirement savings were to remain hers.
If, like Ngaire, you have a relationship property issue you need help to resolve then give Family Law Results a call on (09) 297 2010.
The family who had just appeared in Court were all in tears as we walked out. There were hugs and expressions of gratitude all round and a huge sense of relief. A monumental event had just occurred for this family. My clients had successfully adopted a child born to other family members. The reasons why this arose are long and unnecessary to dwell on here. Suffice to say, the child’s parents were fully supportive of the adoption and a long family tradition and culture of informal and formal adoptions within the family preceded the child.
When I am approached to assist with an adoption of a child by members of its family, I begin by cautioning them that the Family Court may not grant an adoption. This is due to a concern that an adoption will legally distort the child’s relationships. For example, take an adoption by a grandmother of her daughter’s daughter (her granddaughter). After the adoption, in the eyes of the law, the grandmother is now the child’s mother, the child’s mother is now her sister, the child’s siblings are now her nieces and nephews… and so it goes on.
To avoid this distortion, parenting and guardianship orders are often used instead of an adoption. Such orders don’t legally change the family relationships but give the family members who are caring for the child the rights of a guardian to make decisions about the child’s welfare and rights to the child’s day to day care. The child’s biological parents retain their guardianship and legal rights to seek contact with the child.
But what, as for my clients, the security and certainty of adoption is really what the family all seek? There is no absolute rule against family members adopting a child of their family. The concern about the distortion of family relationships is just one factor to be taken into account by the Court. The Court must decide if the adoption will promote the child’s welfare and in doing so, must balance a range of factors.
Increasingly, one of the factors that may be relevant is the culture of the child and parties. This was a particularly important consideration in the adoption I began this blog referring to. What role, culturally, do wider family members have in the raising of a child? What is the relevant cultural perspective of adoption?
Over 20 years ago, the High Court indicated that it could not see why full regard shouldn’t be had to the cultural attitude to adoption of the family concerned. Time has marched on since then and with it, our society is increasingly multicultural. In step with this, the Court has recognised in several cases (including the case of my clients above) that adoption cannot be viewed through a European or Pakeha lens alone. An adoption that may be considered inappropriate in a European setting may well promote the welfare of a child in a Maori, Pasifika or Asian family.
The Adoption Act is widely regarded as outmoded and overtaken by changes in society’s values and make-up. This recognition of other cultural perspectives is an example of how the Courts will attempt to make the Act work as best as possible in response to those changes.
Got a query about adoption? Give us a call at Family Law Results on ph 0064 9 297 2010 or email us at email@example.com.
An enquiry came into Family Law Results’ website that was similar in theme to other enquiries we regularly receive about child support:
“I need financial assistance for my children from their father, my ex husband. I don’t know if it is worth applying now for child support because he refuses to pay. He’s self employed and I am scared he will just hide his considerable income”.
What do you do in the situation where you aren’t receiving financial support for your children from their other parent? Perhaps the other parent is on a low income or, like this enquirer, you fear he or she will “hide” the true extent of his or her income. Like the enquirer above, you may be feeling the situation is so futile that it is not worth applying to IRD for an assessment and collection of child support.
I struggle to see any merit in “not bothering” to apply for child support in circumstances where coming to a private agreement with the other parent is not possible. By deciding it is not worth applying because your ex won’t pay, you are creating a self fulfilling prophecy – you are guaranteed of one thing: to receive no child support! When you apply for child support, IRD will assess how much is to be paid and will set about collecting it.
One thing you shouldn’t do is delay applying for child support. IRD does not back-date a parent’s child support liability. This means IRD will only assess and collect child support from the date it receives the application so delaying an application merely results in increasing the period of time for which you do not receive any support. Sometimes the lodging of an application sharply focuses the other parent’s attention on the issue and further discussions ensue resulting in an agreement. By making your application, you are at least getting some child support in the meantime. If things change and you come to an agreement about child support, you can always withdraw your application with IRD or lodge a voluntary agreement for IRD and ask IRD to collect the child support that is to be paid under that agreement.
IRD has a lot more tools for collecting child support at its disposal than you will have. For example, if a parent doesn’t pay, IRD can have the payments taken from that parent’s wages or bank account. IRD can also charge penalties for non payment and take legal action to recover owed child support.
Often people are concerned that the other parent will respond to a child support application by “hiding” their income through a trust or by being self employed. The result being that the parent is assessed to pay a lower amount of child support. This is a difficult scenario to resolve. When first assessing the amount of child support to be paid, IRD will use income information it holds from the previous calendar year (for salary and wage earners) or two tax years ago (for self employed or overseas parents). This makes it hard to initially “hide” income unless the other parent has been doing so for some time prior to the application. Later, if the other parent’s taxable income drops significantly, you can apply to IRD to review the resulting lower child support assessment on the basis that the other parent’s full income or earning capacity are not being fully taken into account in the assessment.
There are no easy solutions if a parent is determined to minimise their child support liability. However, for most people, getting something by making an IRD application is better than the alternative of receiving nothing.
For assistance with financial support and other family law issues, give Family Law Results a call on (09) 297 2010 or drop us an email at firstname.lastname@example.org.
Lance and Cerise had been living together for three years when Lance finally took the advice of Beyonce and “put a ring on it”. Cerise was ecstatic at the 1 caret of diamond and gold brilliance she now had sitting on her ring finger. She immediately got out the wedding folder she’d been storing bridal magazine cuttings in for years. She and Lance spent many week ends visiting potential wedding venues, booking caterers and deciding on invitations and table settings. The wedding plans were all going swimmingly until one day, Lance announced to Cerise that he couldn’t go through with the wedding. He believed he now had feelings for someone he had met on his indoor netball team and all this wedding planning was just too stressful for him!
Lance and Cerise were ultimately able to agree on how to divide most of their property except when it came to the issue of the engagement ring. Lance had used up a large part of his savings and borrowed some money to buy it so he argued he should get it back or at least be paid back for it by Cerise. Cerise, on the other hand, felt the ring was hers and that given he was the one to cancel the wedding, Lance shouldn’t add insult to injury and expect to keep the ring as well.
So what does the law say? Under our relationship property laws, gifts made to a partner for their use alone is the separate property of the recipient. A gift of jewellery will usually be the separate property of the recipient. Thus, unfortunately for Lance who is no longer taking advice from Beyonce, the engagement ring is Cerise’s to keep – it doesn’t form part of the relationship property pool for equal division.
Need assistance with a relationship property or separation issue of your own? Give us a call now to discuss how Family Law Results can help you: ph 0064 9 297 2010 or email email@example.com.
A reader of this blog asked whether a relationship home should be valued by a registered valuer or by a getting a number of real estate agents and whether the Court had a preference. Property valuation? Property appraisal? They’re the same, right? No, they are not and the distinctions between them can be important when it comes to making decisions about what is often the largest asset in a relationship property pool – the family home.
Firstly, let’s look at the differences between a registered valuation and a real estate agent’s appraisal. A valuation report can only be prepared by a registered valuer. A registered valuer will have undertaken considerable education and experience in order to be able to arrive at a definitive value for your home, taking into account a wide range of factors. A valuer will charge for his or her services. The valuer is legally responsible for his or her valuations and will base it on relevant evidence and information about the property (having viewed it), the market, Council zoning and any legal issues.
An appraisal can be done by a real estate agent and is an indicative estimate based on recent sales of properties in your area. It is not a true indication of the actual property value and often appraisals by different agents can vary considerably. An agent does not usually charge for an appraisal – it is often seen as part of their marketing to get your listing. An agent is also not legally responsible for the appraisal in the same way as a valuer is for a valuation.
So, faced with a relationship property division, when would you use an appraisal and when would you use a valuation? In large part the answer to this depends on what you intend to do with the home. If you and your spouse have agreed to sell the home then the market will ultimately determine the value of the home. Obtaining a number of real estate agents’ appraisals will help you decide on an agent to list with, how to market the property and the price range you may expect to sell for. If you and your ex cannot agree on these aspects of selling the home, then you may need to ask the Court to decide these issues in which case you will need a valuer’s report and recommendations as expert evidence for the Court.
If you are getting an appraisal, don’t rely on just one – get a number of them, take out any that are wildly varying from the rest and then take an average of the remaining appraisals. Being estimates, you will usually find they vary. I have seen clients impressed by a high appraisal only to be disappointed later when the market didn’t live up to the expectation this created.
If one of you is going to buy the other out of the home, then a registered valuation should be obtained as it will assist you each to make a properly informed decision about the purchase price to be paid. For the buying party, a valuation gives peace of mind that too much is not being paid for the property. For the selling party, a valuation gives peace of mind that an appropriate payment is being received for the home. Banks will usually require a registered valuation when considering an application for finance to purchase one party’s share of the home. Again, if there is an issue about the value to be attributed to the home for one person to purchase the other’s interest in it then valuations will be needed as expert evidence for the Court.
Some clients baulk at the prospect of paying for a valuation. However, most see the value in getting a valuation when they consider the peace of mind it gives them in being able to make informed decisions about . Often the valuer’s fee is more than recovered when the client receives the valuation and, recognising it differs from their estimate, revises their settlement proposals.
Got a relationship property issue? Call us at Family Law Results on 0064 9 297 2010 or firstname.lastname@example.org
“I’ve been paying Child Support but I don’t think I am the child’s father”. My client had been paying child support for quite a number of years for a child who, for a number of complicated reasons, he had not been having a relationship with. Information had recently come to light to suggest someone else was the child’s father. He wanted certainty. He needed to know.
This isn’t an uncommon scenario. I am increasingly having discussions like this with men who are feeling uncertain about whether they are actually the father of a child they thought was theirs. Peace of mind eludes these men and in many cases, is accompanied by a very real grief.
So, what happens next? This largely depends on the nature of the relationship you have with the child and the child’s mother. However, irrespective of this, it is important to resolve the issue sooner, rather than letting the uncertainty fester. My experience is that these issues don’t go away and are often more difficult to resolve and more traumatic for the child the longer the situation is allowed to continue.
People often overlook the implications for their estate of whether they are the father of a child or not. On your death, your children may bring claims against your estate if they are not provided for by you in your will. Thus, resolving now who your children actually are can avoid disagreements and costly legal issues for your loved ones and your estate to resolve after your death.
Sometimes whether you are a child’s father can be resolved promptly, without the need for Court involvement, by having a DNA test agreed to. However, it is important the test is done by a reputable laboratory with a very secure process. The Court, Internal Affairs and IRD may not accept test results that aren’t undertaken in such a manner.
Where agreement can’t be reached to having a DNA test undertaken, proceedings can be brought in the Family Court to determine the issue of whether you are the child’s father or not. The Court is likely to recommend DNA testing and, in some cases, will appoint itself a guardian of the child in order to ensure a child undergoes a DNA test.
Once the DNA results are back, this usually resolves the issue. If the test comes back confirming my client is the child’s father, there may be questions about his ongoing relationship with the child to resolve. If a test comes back showing he is not the child’s father, I work with my client to resolve any issues around correcting the child’s birth certificate and having IRD refund any child support paid unless the client is going to have to continue to pay as a “step – parent”.
Irrespective of the result of the DNA test and the emotions that result may bring, the peace of mind that had been eluding the client is achieved.
Got questions about how to resolve paternity issues? Contact the team at Family Law Results on 0064 9 297 2010 or at email@example.com.
A couple of weeks ago I wrote about some of the hoops to be jumped through in order to legally formalise an agreement about relationship property. One of the legal requirements for a relationship property agreement was that each party receives independent legal advice about the effects and implications of the agreement. In order to be valid, your agreement must be certified by your lawyer to show you have received independent legal advice about it.
So, what happens if you get independent advice and don’t wish to follow that advice? Does this mean your lawyer will refuse to sign the certificate on your agreement?
On several occasions, I have found myself in the situation of advising my client not to proceed with an agreement but where they adamantly wish to. On some occasions where I have felt the client had issues that impacted on their understanding of my advice or were unduly being pressured to sign, I have refused to certify the agreement until other steps were taken. However, on many occasions, I have signed the certificate even though entering the agreement was contrary to my advice to my client.
Consider one of my recent clients. We’ll call him David. My assessment of David’s agreement was that he was agreeing to his former partner receiving significantly more than would be required under a strict division in accordance with the Property (Relationships) Act 1976. I took David through what the law said about how their property should be divided. I advised him against the settlement. I worked up the numbers for him so he could see exactly how much less he was actually receiving and how big that figure was. I sent him away with my calculations to “sleep on it”.
David called me a couple of days later and said he had thought about my advice, that he understood he was being more generous than the law said he had to be but that he still wanted to go ahead with the agreement. He explained some of the reasons why he was taking this approach. We met up and he signed the agreement and I signed the certificate.
Why did I sign the certificate even though David was going against my advice? I did so because the certificate only confirms that I have provided advice to David about the effects and implications of the agreement, not that he has followed that advice. In David’s situation, I was comfortable that:
- I had all the valuation information from him and his former partner that I needed in order to complete my advice to him accurately and properly;
- He had understood my advice;
- He had taken time to make a considered decision, not a rushed one; and
- He was acting freely and not under pressure or duress;
Most importantly, I recognised that the law is only one factor that went into David’s decision about the settlement. Sometimes the law bears little resemblance to the interests or needs of the parties and their family moving into the future. In David’s case, he was squarely focused on not only his interests but also those of his former partner and their young child and came to a settlement that he felt best met those.
When a client says “thanks for the advice, I get it but I want to do something different” I recognise that, like a jigsaw puzzle, there were many pieces to make up their decision and the law was just one piece. My client may have had to weigh up a myriad of other factors:
- the financial cost of continued negotiations or litigation
- the personal and emotional cost of continued negotiations or litigation
- the importance to the client of a positive future co-parenting relationship with the other person
- the desire to move forward
- wanting to do what is perceived to be “morally right”
- a desire to ensure the children are well provided for
- wanting to ensure that the agreement leaves both parties on an equal economic springboard for the future
the list goes on…
If you are concerned about a family law issue, give me or the team at Family Law Results a call to discuss how we may assist you: www.familylawresults.co.nz