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Picking up the financial pieces

19 Dec 2016

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By Gillian Stuart, Senior Associate, Aspiring Law

Whether the loss of a serious relationship comes as a complete shock, or the writing has been incandescently on the wall for some time, there’s no colour-by-numbers approach to dealing with the inevitable subsequent practicalities.

When reflecting on the dozens upon dozens of people I’ve worked with, there are some common threads I’ve noticed among those who regain their footing that little bit quicker – they tend to be proactive taking control of the things they can, while, at the same time, letting go of the things they can’t.

Let's look at some of the practical issues that typically need to be considered and attended to in the wake of a break-up.

First up: finances. One party taking another to the cleaners tends to be the stuff of urban myth and Hollywood scriptwriters. The unfortunate reality is, it’s actually extremely rare for a separation not to negatively impact on both parties' financial standings, and often markedly so. Relationships can derail spectacularly after a split, and money is often where it starts. People commonly underestimate just how long it can sometimes take to resolve the division of relationship property – and that’s even when court proceedings are avoided.

Money matters

Some initial questions to ask after a separation: Do you need to think about freezing bank accounts? If bank accounts are joint, then there can be a case for quickly separating funds to prevent one party snaffling the other’s share. But a word of warning, there can be a flip side – increasing tensions and ill feeling: 'There was no need to do that'; 'Why didn’t you speak to me?'; 'Don’t you trust me?'

Make sure the accounts you are liable for are in your name, and the ones that you shouldn’t be are not. Have you formally been removed, with written confirmation from the lender? Bad debts in joint names can affect your long-term credit rating.

You’ll need to set up new bank accounts, and make sure you have sole access to them. It’s wise to change all pin numbers and passwords. Email addresses might need to be looked at, and, again, passwords updated. The same applies for credit cards, credit arrangements and accounts with overdraft or loan facilities. It’s essential your former spouse or partner can’t access accounts without your consent.

If you have a home loan and money is tight, discuss this with your former partner and look at the possibility of applying for a mortgage holiday or, perhaps, extending the term of the loan. Check out the options with your bank. If you know you’re going to struggle to pay the mortgage, always approach your lender before the loan goes into arrears.

Where property is held in one partner’s name, prompt legal action might be needed to prevent its sale. Remember, just because property is in one party’s name, doesn’t in any way nullify a claim by the other. The Property (Relationships) Act covers how homes and other assets are divided when parties separate. The default is 50-50. In general, it covers de facto couples who have been in a relationship for over three years. Take heed, though; if you were together less than three years, the Act might still apply if there’s a child, or if one party made a substantial contribution.

Do you have a contracting out agreement? If so, how does that impact on your financial situation? Was the agreement fair? Is there a possibility of having it overturned? Answering these questions promptly and accurately can be crucial for your financial future – please, get legal advice quickly.

Cutting your cloth

Where separation has meant less income coming into your home, you might be eligible for financial support from your former partner by way of spousal maintenance. Again, it is important you seek legal advice on this as soon as possible after the break-up.

The Inland Revenue Department oversees child support. Its website ( – click on the “Individuals and Families” tab at the top) is extremely good, and a great place to start calculating entitlements. (Note: there can be some exceptions, and there is scope for either party to appeal standard payments.) You can either come to a private arrangement with the other parent, and payments will be direct, or opt to have the money go through IRD. You might also be eligible for Working for Families, which is explained on the IRD’s website.

The most important part of you to look after post-separation is your health. A break-up has a huge impact on mind, body and spirit. Make sure your nearest and dearest are aware of your situation. It’s important you have as much support around you as possible. If you have children, they need you to be there for them at this time more than any other. If things are getting too much, please seek help, whether that be from your friends, family, a counsellor or GP. There are various support organisations out there waiting to help, too.

Keeping it civil

I always say to couples that the more they can discuss and sort out between themselves the better; however, some legal issues do need to be addressed with professional help. In volatile situations, often it is prudent not to deal directly with your former partner. Family lawyers are there to solve problems and not create them, so take advice early.

On the face of things, dividing relationship property might appear simple; the reality is, it can actually be very complex, being a dynamic and ever-changing area of the law. Please take some quality legal advice as soon as possible – even if it’s only an initial consultation to ensure you have considered everything you need to, as well as a further visit to review any draft agreement to give you the peace of mind your decisions are well informed and ones you can live with long term.

Last updated 19 December 2017