5 Common Myths About Separation
Myth #1: I can rely on a private agreement to divide property on separation without involving lawyers
Any agreement around division of property on separation must meet certain requirements in order to be enforceable. This means any private agreement dividing property, whether it is verbal or written, will not be enforceable and will place your future assets at risk of a claim by your former spouse/partner.
In order to properly divide property on separation, both parties must have independent lawyers to advise them about what their legal entitlement is compared with the terms of any agreement. This will allow you to make an informed decision about whether any agreement that is reached is fair.
If the correct process is not followed, this could lead to any agreement being unenforceable and could place your current and/or future assets at risk. It is therefore important to obtain legal advice about division of property in a timely manner.
Agreements reached before taking legal advice can often lead to a difference in expectations, particularly when one spouse/partner seeks to change a private agreement as a result of the legal advice they receive. This may make it more difficult to settle division of property.
Myth #2: A trust will protect your assets on separation
A common misconception is, if a person has a trust, their assets are automatically protected from a claim on separation. This is not correct. The best way to protect your assets from a relationship is to enter into a contracting out agreement (colloquially known as a prenuptial agreement) as having a trust on its own will not fully protect you.
Whilst there are some circumstances in which a trust can provide a limited form of protection from relationships, these circumstances are narrow in nature and are not simple or straightforward.
It is therefore important, when entering into a relationship, to consider how you wish to protect your assets. You should start thinking about these matters either before or shortly after you start living with your partner. It is prudent to take legal advice about these matters if you want to ensure any assets you are bringing into a relationship are properly protected.
Myth #3: If you have primary care of a child, you don’t need the other parent’s consent to move to another city
Significant decisions, such as a child’s city of residence, are what is known as guardianship decisions. A biological mother is automatically a guardian of their child. A father is a guardian if they are named on the child’s birth certificate or were living with the mother at any stage during the pregnancy.
If both parents are guardians of a child, there is a legal obligation to consult with each other whenever making any guardianship decisions. This legal obligation applies regardless of who has primary care of the child and whether or not one parent is having any contact with the child.
This means, if a parent who has primary care of a child seeks to relocate the child to a different city and the other parent is a guardian, they must consult with that parent and obtain their agreement. If agreement cannot be obtained, an application to Court is required. It is important not to relocate the child knowing the other parent does not consent as there could be significant consequences, such as the other parent obtaining an urgent Court order to have the child returned.
Guardianship decisions are not restricted to moving cities and also include matters relating to a child’s education, religion and significant medical treatment.
Myth #4: You need a lawyer to sort out care arrangements for your child on separation
When parents separate, a commonly held view is the involvement of lawyers is required in order to sort out care/custody arrangements. If you and the other parent are able to continue to parent in a manner that you are both satisfied with, there is no need to engage the services of a lawyer.
It is only if any issues arise, such as the amount of time a child spends with either of you or the making of important decisions, that it may become necessary to obtain legal advice. With that said, sometimes it is useful to obtain legal advice on separation even where there are no issues as it may assist you in ensuring you are able to deal with arrangements in an appropriate manner.
Myth #5: There will be an equal division of assets on separation
The division of assets on separation is not always equal. The most common circumstance in which an unequal division of assets takes place is where there is what is known as an economic disparity claim. An economic disparity claim arises where the income/living standards of one spouse/partner on separation are significantly higher than that of the other and this disparity has come about as a result of the division of functions during the relationship.
The most common situation in which economic disparity claims arise are where one spouse/partner has given up their career to care for children and/or maintain the household and the other spouse/partner has continued working full time.
Another type of claim which can be made is for an unequal division of assets on the grounds that equal sharing is repugnant to justice. This claim, however, is much less frequent and requires a high threshold to be met.
If you consider you might be entitled to an unequal division of assets on separation or seek to defend any claim for an unequal division, it is important to obtain clear legal advice about your legal position.
If you require assistance with any matters relating to the above, please contact Sharon Chandra at sharon@turnerhopkins.co.nz.