Separation and Financial Fairness.
Separating from a long-term relationship can be emotionally challenging. This article explores the legal and financial considerations in reaching a fair settlement.
Liz and Frank had been together for 18 years and married for 15. They had three children, aged 8, 11, and 13. Their relationship began when Liz was finishing off her accounting degree, while Frank was working in a property management company. Introduced by mutual friends, they knew early on that this would be their forever relationship and pooled their funds to start saving for a house.
When they purchased their first home two years into the relationship, Liz’s parents helped them by giving them a large sum of money which doubled their initial deposit. Nothing was done through the lawyers and the advance wasn’t documented. Liz’s parents didn’t want to offend Frank, especially when Liz and Frank were getting married in just a few months.
When Liz and Frank got pregnant with their first child, they had a loose plan to both work less hours to make sure that their baby would be mostly looked after at home by at least one parent.
Liz had been swiftly moving through the ranks of the large accounting firm she was working for, and it was quickly made known that her progress would be halted if she took chunks of time out to look after children (this was 15 years ago when flexibility was not such a thing in the workplace). Liz and Frank made the decision that Frank would leave his job and stay at home with the children to enable Liz to progress, given she had a much greater earning power over time.
Fifteen years later, things were more than rocky between Liz and Frank. She was now a partner in a firm and Frank had recently gone back to teachers college where he was part way through a degree in teaching. Their lives seemed to be heading in vastly different directions, and they made the decision to separate.
Liz was hopeful that they could mostly sort things out between them before going to the lawyers. However, Frank immediately “lawyered up”. This caused huge tension between the two of them and when Liz received a letter from Frank’s lawyer, she decided to move out of the house. Frank’s lawyer was claiming that he should get a bigger share of the assets because of the economic disparity between the two of them.
The lawyer said that because Frank had stayed home to look after the children, his career hadn’t progressed like Liz’s, so he needed some compensation for that.
Liz was frustrated as she felt that had been a decision they had made together, in the best interests of the children. Frank was also claiming maintenance from her to help support him through teachers college, as well as helping with the fees for him to re-train.
Annoyed, Liz went to see a lawyer who explained that Frank may have some valid claims. The lawyer explained that it would be better to try and negotiate an outcome with Frank so that the two of them didn’t simply end up spending huge amounts on legal fees. Liz remembered that when they bought their first house her parents had put a large chunk of the deposit into the house. But the lawyer said because that had not been documented there was a presumption that this was a gift to her and Frank, and that Frank would be entitled to half of that gift. If there had been a loan arrangement documented, then the loan would have been repayable to Liz’s parents. The lawyer did say because Liz had moved out of the property and was paying rent elsewhere while Frank still lived in the home rent free, that she could claim occupation rent from him. This would likely offset some of the economic disparity compensation Frank could claim from Liz.
The law around relationship property is complex and very fact dependent. It is important to get legal advice on the entitlements you and your partner may have, to ensure a fair outcome and avoid a messy and potentially costly separation.
If you feel you could use some specialist advice for your personal situation contact our Trusts & Wealth Protection Team.
