parallex

An annual spike in summer divorce and break-ups has an even darker side

January 28, 2016 at 6:10 PM

By Henry Chellew

Ironically the dark side of the Kiwi summer is not so much the spike in marital separations and relationship break-downs that law firms witness over this period, but the potentially more painful and costly rebound or ‘drift’ relationships that result.

This is the time of year when law firms see an increase in relationship law matters for a variety of reasons. For example, people spend more time with each other and come to the conclusion that they are no longer compatible, or they’ve take time to reflect, take stock and rue their place in life.

From my observations, too much alcohol and financial strain certainly play a part in relationship break-ups after the holiday period, and by the time the clients get to the lawyers there often isn’t much more that can be done to save matters. 

However, it is the resulting rebound relationships – usually unplanned and impulsive, where people drift into new relationships – that can really do damage, particularly from a financial and relationship law perspective.

I have seen cases where a client, often middle-aged or older, moves in with somebody else – or vice versa – following a relationship break-up, perhaps because they need some place to stay, or are just looking for companionship. 

People drift into these living arrangements that are meant to be temporary, and then just never move out. The result is that it isn’t long before they are living together in a de facto relationship – it doesn’t even have to be a sexual relationship – and then suddenly, under relationship law – after three years of living together – they are entitled to potentially half the other person’s home and other assets.

If you are exiting a relationship, nut out the bare bones of a sensible agreement between the two of you because it will save an awful lot of money and heartache down the line, and if you are moving in with somebody, or they are moving in with you, get a pre-nuptial or relationship property agreement before you start living together.

I have seen clients lose almost everything to successive relationship failures, but it was the rebound ones that did the most damage. 

It’s easy nowadays to drift into living with somebody without thinking about what it means from a property sharing perspective. People find it very difficult to ask for a pre-nuptial and when you do, it can be met with mixed reactions, including refusal. 

In every case, if the other person refuses to sign a pre-nuptial agreement it should be the highway for them – yes it’s easier said than done, but it will save you a world of pain down the line. Another development that can accelerate property-sharing obligations and catch people on the hop is an unplanned pregnancy. 

Pre-nuptial agreements need to be personal and specific to the circumstances, running along a sliding scale that varies from protecting the assets you had before the relationship (‘what’s mine is mine and always will be and we will never share anything’), to (‘if we acquire anything during the relationship we acquire it together’) and others that entitle the other party to a percentage of the assets when the relationship hits certain milestones, like 5, 10 or 15 years together.

One mistake that many people make is to put too much faith in a trust to maintain the separate nature of the property in the trust. If, for example, your rental property is in a trust and your new partner becomes involved in helping you maintain the property, then they could argue that they are entitled to a share because they sustained or added value to the property. 

The other dreadful mistake we sometimes come across is that some people just don’t realise that they are in what can be argued is a de facto relationship, and so property relationship obligations kick in.