Relationship law trying to catch up

When Frances* left her husband after 20 years and four children together, she did not realise how difficult it would be to get her half of their assets.

The split was acrimonious and negotiations had to be done through a third party.

‘‘I had to make choices at every step around the cost of the lawyer and the likelihood of a positive outcome,’’ she said. ‘‘I might have gotten more if I had gone to court but I was at the limit of my resources.’’

She walked away with a car and $14,000 of her former husband’s KiwiSaver. She had to pay $700 to have the order made to transfer it.

Frances took 12 years out of her career to look after their children. Her husband now earns $40,000 a year more than she does – up from $5000 difference at the start of their relationship.

It is issues like these that will be considered as the Law Commission reviews the 40-yearold Property (Relationships) Act, which sets out the rules for dividing property in a breakup. It will launch a paper on Monday seeking public feedback.

Among the questions to be considered are whether the law applies to the right relationships, whether the right property is being shared, how the law meets the interests of children, and what should happen if one person is financially worse off.

Commissioner Helen McQueen said much had changed since the law was first enacted. Now, 46 per cent of children are born to unmarried parents. The way relationships start, end and how people repartner has also changed.

‘‘Repartnering is something that is extremely complex from the perspective of dividing property,’’ McQueen said.

There were questions about whether the right de facto relationships were being captured by the law, she said. More people were partnering later in life and choosing to keep their financial affairs separate.

McQueen said the review would consider what was counted as relationship property. It was possible that could include the ability to earn income, if the relationship had allowed one person’s career to advance ahead of the other’s.

‘‘There are a lots of hard things about that. It’s not easy to value someone’s earning capacity ... they have to go on and earn it, earning capacity doesn’t just sit there waiting to be divided as a monetary sum.’’

Lawyer Selina Trigg, who specialises in family law issues, said the law as it stood seemed straightforward at first glance, but closer scrutiny often revealed unfairness.

There were problems in particular in relation to the section of the law that dealt with economic disparity. Trigg said it had not lived up to its potential.

‘‘The focus has been on compensation for a spouse for loss of income and earning ability due to their domestic responsibilities rather than looking at the positive enhancement to the other party’s career and income-earning abilities that was aided by the spouse holding down the fort and looking after the kids.’’

McQueen said the review would also consider the role of trusts. She said it was astounding how many New Zealanders held property in a trust structure.

West Aucklander Anissa Ljanta was burnt by one. It was not until her relationship of 10 years ended that she realised the document she had signed, which she thought gave her an equal share of their assets, listed her only as a discretionary trustee of the trust holding the property.

‘‘I left with $200 in my bank account because he had control of the finances.

‘‘I did get something in the end but nothing near half the equity in the house.’’

She was left unable to buy another house for her and her son. ‘‘It’s been really hard for him. We moved into a rental after the breakup and we’ve just had to move again.’’

Ljanta works in the charitable sector while her former partner is a financial director earning a much higher salary. ‘‘It’s not about how much money I could get, it’s what felt fair. We had agreed and I got blindsided.’’

She is launching The Trust Project, to share the experiences of other people who have been caught out.

The rewritten Trusts Bill, which will update and improve the law around trusts for the first time in 60 years, has had its first reading in Parliament.

Ljanta said she wanted to raise awareness about the current laws so that people were informed and could protect themselves.

The Law Commission is seeking feedback on its work until February and will report to the minister next year.

"I left with $200 in my bank account because he had control of the finances." Anissa Ljanta, above, campaigning to raise awareness of trust law

Frances did not want her full name used.