relationship property

3 steps to make post-break up financial decisions manageable

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Working out financial details after or during a break up can be awkward and upsetting. This situation, while sometimes fraught, is definitely not uncommon! If you find yourself in this position, here are the steps you can take:

 

1. You both need independent legal advice

Depending on the length of relationship, if you’re married, or whether you have children, there will potentially already be lawyers involved. Not all solicitors do all types of law, bigger firms will generally have a cross section of specialist solicitors that you can draw on. You’ll need to decide who keeps your current solicitor, and who goes to another lawyer for independent legal advice.

If one of you wishes to purchase the house you both currently own, or one or both of you wish to purchase other properties once current home is sold, you need to confirm how profit/equity will be divvied up.

The law has some very strong views on who gets what (which may differ from your opinions), if there had been a relationship property agreement drawn up, or if the property is in a trust, there are still plenty of questions for your solicitor.

 

2. When you decide to purchase, the bank assesses your current position

After the above is confirmed, the bank then reviews your current position based on your...

●      Deposit

●      Income (note if Child Support, is not set up through IRD, banks may not use this in you income calculations)

●      Debt levels

 

3. Talk to a financial expert sooner rather than later

We specialise in helping people navigate all the layers of property acquisition. We can answer questions like: What is happening in the housing market? How do I make an offer? Can I use KiwiSaver?

There are a lot of moving parts, so have a conversation with us when you know a decision needs to be made around your current property(s), let us lower you anxiety, and bring you one step closer to inner peace!*

 

*Lance does not have the ability to bring you inner peace.

Lance Shearman is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A Disclosure Statement is available free of charge upon request.

 

 

 

Money Can’t Buy Love, But Love Certainly Buys Money: Pt 2

Graham picks up from last month's relationship and money advice, drawing from his own recent adventures. 

 

UPDATE FROM LAST MONTH: ... Yes ! We now have agreement on when the relationship started ... I was wrong and I'm not afraid to admit it.

Rebecca is away in Australia so I feel as though I can make rapid progress with this article, so here goes ... 

One of the most common unspoken agreements between partners is that they start off by assuming that whatever they bring into the relationship, if it all falls apart, they will take out.

For example, if I bring in a house and Rebecca does as well then if the unthinkable occurs and we split, then we both take our respective houses out. Easy.

However, a first level of complexity arises here: What if one of the houses is a rental and the other is the shared family home? How do we cover costs and who pays for what? What happens if we need new carpet and, most importantly, who gets the biggest wardrobe? What happens if I've spent my summer painting and renovating my partner's house? 

The next level of confusion can crop up if we buy something together and need to use the existing properties as equity contributions. 

One way to manage all this is to identify, in dollar terms, the net position of each party and document that. So Rebecca enters the relationship with say $750,000 net position (market value of house less mortgage debt) and I bring say $500,000. We combine our assets and if the unthinkable occurs we split our combined assetts Rebecca gets her $750,000, I get my $500,000 and the left over is split in an agreed manner.  

This is now hurting my head and I can't agree on the way forward. Rebecca is out of town. I'm off to get some legal advice from my solicitor Katherine Mexted and will report on progress.

 

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request. 

Money Can't Buy Love, But Love Certainly Buys Money

A relationship might start with fancy meals, jewellery and other over-priced romantic gestures, but when they end we’re suddenly not so giving with our money and property. Graham recommends getting things in writing sooner rather than later.

 

Money may not be the topic of conversation of choice at the start of a relationship but it certainly takes up a large chunk of discussions when relationships end.

 

For those who are still on marriage number one, you may never have had this experience. I, therefore, will share my tips for new players …

 

And we need to frame this conversation in according to New Zealand law, which states that once you’ve been living together for three years, all property where you are both living is split 50/50 if you decide to breakup.

 

The way to avoid this is to contract out of this 50/50 split via a Relationship Property Agreement, which you draft with the help of friendly lawyers.

 

Here are the key points to remember in these conversations. I have written these with the help of my partner Rebecca who I am currently having this conversation with. You will see my thoughts ending with (G) and, obviously, Rebecca's ending with (R).

 

1. Start this conversation earlier rather than later in the relationship. Not on the first date, but certainly well before you start combining furniture and arguing who is going to put what on Trade Me. (G)

2. Keep emotion out of it and treat it like a business conversation. (R)

3. Do worry about it and get it done. (R)

4. Talk to your friends, especially those who have already been separated. (R)

5. Don't talk to her friends, but do talk to your lawyer who will have facts and not hurtful opinions. (G)

6. Start with wine! (G)

7. Remember that you can change your mind and alter the agreement. (R)

8. Keep on talking. Make notes and email each other. (G)

9. Define the date when the relationship started. (R)

10. Remember to have the same date. (G)

11. ... We are now revisiting and agreeing on the date …

 

To be continued.

 

Graham Goodisson is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

 

 

What's mine is yours. Or is it?

When it comes to property ownerships and relationships (and, more specifically, break ups) things can get sticky. Alex Barendregt shares ideas on how to avoid this potential minefield. 

Most people don’t realise that as soon as they step into a relationship everything increasingly becomes vague and grey in regards to who owns what.

These relationships aren’t just limited to marriage. It can involve both the tangible and intangible property parties have brought and bought into the relationship. It includes savings, investment, furniture, the family home and more.

Lately in the Velocity office, we have had a cold southerly of relationship-break-up cases blow through the door. Sometimes we only get brought on board when it is well and truly too late to make changes. The property has been split up in conjunction with the lawyers and we are just there to re-finance one of the partners out of the family home (if possible).

Typically, people come out of this nasty process with a sigh of relief. But they also come out with this nagging thought: “If only I had set things up right from the start we could have saved ourselves all this stress and financial loss.”  

Oh, the joys of hindsight.

Our goal is to advise clients prior to any of these potential issues. This occurs in combination with their solicitor and/or their accountant, who will, in turn, advise on a structure that could work well for them and their family. This may include setting up a family trust or to draft up a property agreement. Although it takes a little paper work, it’s always easier to avoid the mess in the first place than to untangle the mess once things turn sour. 

 

Here are a few common misconceptions we hear on the topic of relationships and property:

·       “I own the house, not the trust.”

·       “My partner is not on the title so he/she can’t get half.”

·       “I don’t need a will, everything is in my name anyway.”

·       “I moved all my assets to a trust, in case we split up.”

·       “The max my partner could get is half of it.”

·       “Putting investment debt against my owner-occupied house is better for tax reasons.”

·       “We have only been together for 3.5 years, surely he/she can’t have any entitlements to my                  stuff, I worked for it whilst he/she sat at home.”

 

Although there could be some partial truth to these examples, they all represent an extremely grey area. And as complex as it might seem from the outset, if you have made any of the above assumptions, you should definitively consider invaluable advise from a lawyer or accountant. A small invoice now could save you half of your property in a couple of years’ time.

If this article makes you wonder if your trust is administered correctly or if you need a property agreement, have a chat to your professional. If you don’t have one, feel free to give me a ring as we can connect you with a wide variety of solicitors and accountants who could cater for your needs. 

 

Alex Barendregt is a Registered Financial Adviser with Velocity Financial. No investment decision should be taken based on the information in this blog alone. A disclosure statement is available free of charge upon request.

 

As it can be complex, people needing advice on this area of law should always consult a lawyer. The information in this article is not intended to make any legal or tax decisions on these maters and the article is generic by nature. For personalised advice seek out your legal professional.

 

To the best of Velocity Financials knowledge, all information in this guide is true and accurate but should only be used as a reference. Over and above, Velocity Financial assumes no liability for any losses suffered by any person relying directly or indirectly on information in this article, as it is publicly available information on the Property pamphlet of the Law Society NZ. It is recommended that readers consult a lawyer and/or accountant before acting on this information.