Dairy Women’s Network has presented a Relationship Property webinar to give advice in case of relationship breakdown. By Elaine Fisher
When a relationship breaks down, get professional advice early – even before leaving the relationship.
That was among the recommendations from lawyers Angela Kershaw and Nicole Gordon of Eastern Bay of Plenty law firm Hamertons Lawyers during a Dairy Women’s Network webinar on Relationship Property presented in July.
“It is important to get advice quickly. The best outcomes often result from seeking advice before you leave,” Angela said.
“It may sound awful to see a lawyer before your partner knows you are going to leave but, especially in a farming situation where everything is tied up together, a consultation can help think things through before leaving.”
Nicole said fear often stopped people getting advice early.
“We see clients who are afraid to get advice, who don’t want to rock the boat or spend the money but in fact there is a lot of value to be had in getting legal advice early on.”
The webinar hosted by DWN outlined what relationship property is and what can happen when a relationship breaks down. It also covered intergenerational farming operations and how to protect a farm from a child’s relationship break-up.
Constructive Trusts, often used by courts to settle relationship disputes, were explained – as was why they arise in farming situations on relationship break-ups so often.
What happens to the farming operation while the division of property was resolved and how to protect against adverse outcomes were also outlined.
The widely held assumption was that in relationship break ups, property and assets would be divided 50/50 but Angela and Nicole said that was not always the case.
Angela used as an example a family in which husband and wife were both accountants, but the wife left work to raise the family while the husband continued to progress with his career. After 20 years they separated and the husband, because of his earnings and support from his wife, was financially significantly better off than his wife, who had put her career on hold.
“In such a case it would be unfair to divide the property 50/50 as clearly his life moving forward would be easier financially than hers.”
An unequal sharing of the relationship property may be ordered but could be complicated and would involve independent advice from financial advisers.
It was a mistake for a disadvantaged party to walk out thinking the only option was a 50/50 division. “They really need to take some independent advice and tell their lawyer all the circumstances. Likewise, the advantaged party should also talk to their lawyer and be realistic about what the advantages and disadvantages are within the relationship,” Angela said.
Relationship breakups among farming families were often complicated because everything was tied up in the farming operation including employment and the family home.
Consideration must also be given to who would continue to run the farm and who would remain in the home.
“If minor children are involved, who stays in the home may not be the person running the farm. There are questions too around if there is enough money from the farm to fund two separate households,” Angela said.
When it was an intergenerational farming property the situation could become even more complicated if the relationship of a child working and living on the farm broke up.
Both Angela and Nicole stressed the importance of not leaving anything to chance. “You need to think about these issues before they happen.
“To protect against adverse outcomes number one is to have open family discussions about expectations and reach an agreement.”
It was vital parents engaged with the spouses of their child or children involved in the farm when reaching agreements.
“If they are not involved everything can become unravelled. Don’t make promises which are not followed through in documents as that can also lead to problems,” Angela said.
Dinner table promises were common, but Angela and Nicole said it was vital nothing was agreed without advice from a lawyer, and often an accountant and banker.
“I can’t emphasise enough the importance of paying market rates for services. Paying children what anyone else in their role would be paid is vital. If they put money into the farm, document that as debt back to them. Putting money in on a handshake understanding is a big mistake.”
A contract-out agreement in which the son or daughter and their partner had a clear understanding of what was expected was not a complete answer but was close to it.
“It is hard to argue against when people have gone into it with eyes wide open. Don’t leave things to chance. It is much harder to address after the fact.”
Angela said the division of relationship property came down to money.
“I know that sounds awful but realistically the division of assets and who pays what is akin to a business decision. Try to make decisions with your head rather than your heart.”
Relationship break ups were hard for both parties as they represented the loss of shared family goals, dreams, aspirations and perhaps financial security.
“It is a grieving process, even if it’s amicable. To survive it is vital to have a good support team, not just your lawyer. Lawyers are not councillors. It’s really good to see someone, a counselor or psychologist for one or two appointments to get your head around the changes so you are emotionally prepared for what is happening.”
Nicole and Angela both said – “never take legal advice from someone who is not a lawyer”.
Angela heads up the Family and Estates team at Hamertons Lawyers Ltd. She brings compassion and care to sorting out separations, dividing assets, establishing optimal familial arrangements and supporting families in times of crisis.
Nicole specialises in family and estates and has a passion for helping clients cope with emotionally challenging situations. She especially enjoys guiding clients through all of their legal options, helping identify optimal solutions. www.hamertons.co.nz
