By Amanda Morrall
About one-third of New Zealand marriages end in divorce, that compares to a divorce rate of 50% in many other other countries.
The leading cause of break-up? Money.
How should a couple handle the break up process with respect to the money? Here's some of my thoughts based on my own experience. See also my five point plan for when love goes sideways here.
1) Last resort
I would hope that most couples have explored all their options before taking this final step. On that note I would add that the Family Court offers free counselling sessions to couples who are thinking about separation or have separated. I'd take advantage of that because breaking up should obviously be the last resort...it's messy, expensive, sad and it'll set you back years financially. If you want to see how badly, check out figure 5 in this Stats NZ report on net wealth of New Zealanders and compare it with figure 4 depicting net wealth of two parented families. Depressing as hell.
2) How much does it cost to divorce?
It depends on how amicable the break up is and how the couple handles it. You can DIY divorce for as little as $175 or you can rack up a lawyer's bill in the hundreds of thousands. The average, from what I understand in NZ is $10,000-$15,000.
3) So what's the first step, assuming you've exhausted the make-up options?
If you were to ask a lawyer, they will say it's to talk to a lawyer. If there's a lot of money at stake, and the break up is acrimonious, this is probably a good move. If you're separating on good terms you'll probably want to sit down and work out what joint liabilities you have, on-going financial expenditures related to a household, child care arrangements, and division of assets. This will undoubtedly involve some long budgeting sessions. Sorted.org.nz has a guide for the newly separated which might be helpful.
4) What next?
Depending on how toxic, or friendly the separation is, some will opt to put a separation agreement in place. This is a contract laying out the terms of the separation, and can include:
- the maintenance of one spouse or partner by the other
- arrangements for day-to-day care of or contact with children of the relationship
- financial arrangements for expenses
- who will live in the couple’s home
- how the relationship property will be divided
5) Is it legally binding?
It can be under certain circumstances. That is if it's in writing, if both parties have had independent legal advice, have signed it and its been witnessed by a solicitor.
By law, the courts dictate a 50/50 division of assets. That's according to the Property (Relationship) Act. In the case of a separation, it's really up to the couples to decide how they want to carve up the family wealth but most would do it along a 50/50 split. Know your rights. Under some circumstances where an equal sharing of the wealth would be "repugnant to justice" courts can award a higher proportion of wealth to one party.
7) Short end of the stick?
I would say this depends on your perspective, not your gender. That said, the research points strongly to women being left in a financially inferior position. Quite often that's to do with reduced earning capacity, prolonged absences from the workforce relating to child rearing, women taking the family home in exchange for other more appreciable assets, and women not having the equivalent retirement savings as their partners, again due to mothering. The fact remains that men continue to get paid more for the same job as women. In New Zealand the pay gap is around 9.6%.
NZ is more generous than a lot of other countries in this regard. In addition to child support (in the case of the children staying with one parent), separated parents may be eligible for housing allowances, Working for Families tax credits, or possibly maintenance.
9) How far do those benefits go to make up for potential financial losses?
The IRD uses a formula (based on the working parent's income) to determine child support. Depending on child care arrangements, and how much time they spend with each parent, it's possible the higher income earning parent will have to pay the lower earning parent to smooth out financial disparities. Seldom will these support payments compensate for the financial losses caused through divorce or separation. The Hollywood divorce settlement is hardly the norm.
By law, couples have one year from the time a marriage is dissolved by a court order to divide up the relationship property. The criteria for the continuation of benefits and subsidies depends on an individual's circumstances. If they re-partner for example, that will affect the equation. For more on what constitutes relationship property see the Law Society of New Zealand's website here.
Links for when the love dies: