Divorce Café

DIY Relationship Property Division with Stuart Henderson

March 07, 2023 Season 1 Episode 1
Divorce Café
DIY Relationship Property Division with Stuart Henderson
Show Notes Transcript

This episode delves into when you can do your own relationship property division, when you should not, and how to set yourself up for success.  Veteran Family Court lawyer Stuart Henderson talks about the benefits of negotiating your own agreement, what not to do, and the upside of your ex picking ‘the best lawyer in town’.

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Read the article:
https://hendersonreeveslawyers.co.nz/can-you-diy-a-relationship-property-division/ 

Taina Henderson - Henderson Reeves (hendersonreeveslawyers.co.nz)

Shelley Funnell - Henderson Reeves (hendersonreeveslawyers.co.nz)

D.I.Y. Relationship Property Division with Stuart Henderson

WELCOME to Divorce Café, the podcast where we demystify, detangle and (hopefully) detox the legal processes that goes on after a separation, with the EXPERTS in the relationship property world. 

On the home team we have Shelley Funnell and I’m Taina Henderson.

We are partners in law and friends in life.  I think that is an apt description.  We help people, work with people going through a separation to navigate what is usually a complex and bewildering process.

Just to introduce Shelley, Shelley was doing relationship property work and then she went through her own separation.

I sure did.

I work in this area of law because it feels like important work to be doing and its an area where lawyers are actually making a few breakthroughs and you know that makes it a pretty exciting area of law. 

Today's episode is DIY relationship property division so we are looking at how the law divides up your assets when you separate or in the event of a separation and whether that is something that you can do yourself. 

Today we have veteran of more than 50 years in the Family Court in fact he worked in family law before there was a Family Court.  He has appeared many times in the High Court and the Court of Appeal, he is an experienced mediator and counsel for the child.  His clients know him for the empathy and dignity with which he receives them and for his ability to explain complex concepts simply.  Judges and colleagues know him for his mental agility, his prodigious knowledge of the law and his rock-solid ethics and focus on the wellbeing of those he represents.  He runs a successful provincial law firm. The world knows him as Stuart Henderson, Shelley knows him as the senior partner in our firm, and I know him as Dad.  And I actually know him because he represented me on my own one as well so he comes with my high recommendations. So Stuart welcome to the podcast.

Thank you very much.

The first segment in our podcast is where we get our distinguished guests and we ask them to pull a random question out of the hat box bucket. So half of these questions are carefully thought out ponderances on the nature of the human condition and half were made up by Shelley. So you never know what  you are going to get.  So if you can reach in and that can be your first question of the day. 

And I guess as time goes on, questions from the outside.  

Yeah, yeah that would be cool.

Can you read it out?

What got you into the family court and what has kept you there so long.  Mm Gee whizz.  I think it is the privilege of being able to help people with a problem that is likely to be the worst and most stressful problem in  their lives, the end of a relationship.  A psychologist once told me that in the stress loaded situations you get into in life, the one with the most stress is death of a child, and you can understand that.  To my amazement second was death of a relationship.  So it is the second most stressful thing that’s going to happen to you.  

It certainly is.

To be the person to hear and work through and after 52 years be able to give advice and have a lot of confidence in the advice I am giving, I find that is just such, I am so lucky.  And privileged to have the chance to try and use…so I guess that’s my answer.

How I got into it.  I was in a general practice in Wellington where that was one of the things I had to do.  And I was my initial instr when I came out of law school knowing very little about any of this stuff in terms of pragmatism the boss gave me a bit of paper and it was the firms with the compliments slip and he said what you do is they come in off the street and they say they want, this is 1970, and you write down separation agreement, $25 and you give it to them, and most of them will go away and reconcile and decide they don’t need a separation, and the ones who don’t…

This is what your boss said.

This what my boss said.  

Wow.

Anyway it was as haphazard as that that got me into it.  But again it was the honour of being trusted to hear people out to hear their stresses and worries and over time be able to help.

Apply whatever skills you have picked up to actually make that better.

Yep.  And not always succeed. And recognise when things have gone wrong and be able to think of why they have gone wrong and do better next time, its called practising law, I have been doing it for 52 years and I am still practising.  Hopefully getting better all the time.  

Nice one.

So the next section to structure things a little bit it’s called the essentials, and as you’d expect this is where we do a tight five on the basics of the topic and today its relationship property or DIY relationship property division.  I’ve got a ‘1, 2, and 3’.

In five minutes right? 

In less than five.  I’m starting right now.  The first thing that happens when you separate you need to go about dividing, extricating your finances and your assets so looking at your assets the way it works is first you classify your assets as either RP or sp.  RP is things like the family home, it’s the mortgage on the family home 1st the car its most of what’s in the house it's your Kiwisaver, and your savings built up during the relationship its anything you acquired with your wages and salary during your relationship basically it is, I've heard you saying is it is the fruits of your labours while you are together in addition to those other special assets like the family home etc.  Separate property includes things like assets that you had before you got together, it includes inheritances, gifts distributed from a trust as long as you keep them separate.  There is actually a third classification of property which is trust property, and we are not going to talk about that today because it’s a massive topic and we are going to talk about it a lot in other podcasts because its really interesting too and it often comes into divisions.

So once you have classified, sorted things into piles, relationship property gets divided either 50:50 or if there is some rebalancing to be done for example if somebody has taken a non-financial role if somebody has been the homemaker the child raiser and a result isn’t earning as much, and the other was the career person then there can be a rebalancing and so the RP pile gets divided unequally.  

Separate property is generally kept separate and you take it with you, but increases in the value of separate property during the relationship may be share, will be shared, if the parties have contributed to that increase so with money or with effort.  Your classic is a business started before the relationship that both parties put time and effort into.  

Or a rental home that you’ve worked on and gone and done the gardens, and mowed the lawn.

Or you’re topping up the mortgage.

So separate property isn’t necessarily separate.  That’s my tight five. And I just want to say its like a pavlova, if you like food analogies,…it looks simple but there are some pretty complicated parts and it’s really easy to turn the cream into butter.  So that’s  my tight five on relationship property division.

And my caveat there's always got to be a caveat is what… It’s a big topic and there’s no substitute for hearing from a lawyer you have talked to face to face about your own situation. 

The devil is in the detail isn’t it.

It’s never quite as, well sometimes it is as easy as that and we’ll get onto that and some real life stories about when it has worked.  We’ve got other episodes you can listen to if there's something that you want to dig deeper into and there is an article that goes along…you'll see it with the link to this podcast that you can read and get some more information.

So now we get into the guts of it: which is entitled 'Stuff we find interesting'.

Can I jump right back into...

Have we missed something?

No when you said there can be a rebalancing when one person has been the career person and one person has been the home person the rebalancing is in keeping with the whole idea of the act and it’s been in force for 48 years and it should be right down in our DNA but it's not.  The rebalancing is because not only is the person bringing in the money not necessarily going to do better because of that than the person who stays home looks after the kids and keeps the house more or less tidy, their contributions are equal so the principle is equality except in that situation that you were talking about where the rebalancing can be if one of the fruits of the relationship is that the person who went out and worked now has a career that earns him a $1M a year.

Or her!

Or her, thank you.  I said person but I lost my gender equality pretty damn quickly.  And if the other person conversely who may have started out as a trainee teacher or something and then had children has totally lost any earning power and the rebalancing can be that the person who has got the power the economic power has to provide from their half of the RP something to balance up the other persons lack of economic power because it is going to take them a number of years to retrain to get back in the workforce.  But it all goes back to the search for equality between the couple once they are no longer…

Equity doesn’t always mean equality.

Fair enough.

Section 15 that’s the section we are talking about we are going to have a whole other podcast on that because that was one of those moments which made me excited to be in RP law because

I love that the whole basis which is quite surprising or interesting about the act is that all contributions are equal...so I think that’s something that we apply to all of it all of the time.

So I think we should - given the topic of the podcast - well start off with the big question: is it really possible to do your own relationship property division?

Of course it is!  But, there’s degrees of doing it yourself, you can do it yourself, agree what is going to happen, handshake put it into effect and you go your own way, you can write out the agreement, you can go to a lawyer after you have reached the agreement,  so yes you can do the whole negotiation yourselves, but a negotiation that is not legally binding and there’s two elements to the legally binding can be unpicked later on down the track. It can be done and it can work but it needs, goodwill and it needs trust and one of the things that’s happened in that relationship is that the good will has disappeared and they have separated and if you don’t recognise that they there might not be all the goodwill and trust that we need around here, its going to come apart because you can enter into your agreement but that agreement is likely to be unpicked and the only defence the best defence against the agreement you’ve reached and decided on as fair is its fairness.  And fairness is not what you may think, fairness is what the law has laid down, and lawyers know how the courts will apply that principle of fairness and I have talked about one of the parts of it which is that the contributions are equal even if one is producing heaps of money and the other is just wiping children's noses and looking after them.

“Just”

“Just?” – sorry!

Said with irony.  The irony of a father of 6 and a grandparent of 18.

Fairness is in the eyes of the law not in your eyes as you negotiate the division at the worst time of your lives so the best way of having...

And maybe starting from a position of actually misunderstanding the law, that 50:50 sharing is something that is pretty burned into everybody’s souls, but it's not the law, the law is more nuanced.

And I would say you need another ingredient to be able to do it yourselves, and that is simplicity, I think it has to be a simple situation, straightforward, to make it stick.

Because what you might agree at the moment, one party may be feeling guilty as hell because his conduct, can I use the gender there?

Say “their”!

Because their misconduct has caused the end of it and the children are unhappy and everyone is unhappy and it’s the end of everyone’s dreams, you take the house, you’re going to look after the children and I’ll go and earn money and pay maintenance and so forth, well give it a month but even after a year just imagine what’s happened the guys’ gone off...

Forgive me, guys.  One person!

One person has gone off with the capital one person has gone off determined to make their way for themselves and believing that that’s for the benefit a year later that person is finding that hes got no traction because they’ve got no capital and they’ve got a new partner who says we need to buy a house, and you’ve gifted everything to your former partner.

And so what you agree in the stress of that time has got to stick and the thing that is most likely to make it stick when one of the partners thinks again and goes to a lawyer and says ive entered into this agreement can I get out of it, that lawyer is going to unpick it and the lawyer if the lawyer comes up against what is basically fair under the act is going to say hopefully, we could challenge it, there are these things wrong with it but basically you have got a fair agreement let's not spend money on something let's not cause the upheaval.  

And we should have a separate thing on 'how do you find a good lawyer', because lawyers can become part of the problem.  But the best protection even in a complex situation is if its fair, and fairness is in the eye of the law so what I would say to you if you are going to do your own deal, find out what the law is, there are practical and tactical reasons for it.  The tactical reasons are you need to know what you are negotiating with and what your power is and what your leverage is.  Because otherwise if you’ve got some misconceptions you might enter into an agreement thinking this, and then if you find out later it’s not true.

You get too far down the track and it seems awfully unfair to say actually 50:50 isn’t...

Only get into it with some knowledge of what might happen if you are in court.  Lawyers can tell you that.  but then my advice would be and especially with the segment we are in, don’t then do your negotiations through lawyer.  Find out from the lawyer how your negotiation should be going or what your division should be. 

What the law would say.

And then deal with it direct.

See if you can. 

When would you say you should get help?

What I was going to say about your earlier comment was that when you have separated one of the first things is division of property.  Quite often people are worrying about division of property when they are thinking about separating. And so it's sort of a blurry stage and that’s the stage when you need to know what’s going to happen because if you are in a relationship that has unsatisfactory aspects of it and you are thinking I’d do better moving out or moving the other person out, then you need to know what’s going to happen, you need to know how its going to affect the kids and that’s a whole different issue. But your knowledge of who is going to end up with what.

And what happens with the finances.

...Is going to help you make that decision.  And going back to whether you can do it yourself and my suggestion that it needs goodwill and trust.  If you have got so much goodwill and trust between you that you can do the deal on a handshake, why are you separating?  Don’t go to a lawyer, go to a counsellor and find out a) what’s wrong with you that you don’t recognise that loyalty and trust of that degree are golden and b) ok should I be doing this at all?  Not a matter of counting the dollars that you are going to be ending up with, but looking at the emotional aspects, the life aspects of it.  So I think that the thing starts earlier than when you reach the stage when you have to divide it up.  and legal advice from a lawyer who is giving good balanced advice, that’s what’s golden because it enables you to go ahead and not end up with a horrible situation, or better chances of not ending up with a horrible situation at the end.

And I’ve had situations where clients have done it themselves, they’ve maybe written up a handwritten agreement or they haven't had a lawyer sign it off under the act, and a year later someone wants to buy a house, and a year later someone wants to buy a house and they go to the bank and they say I want to buy a house and the bank says yes no problem you’ve got equity, all we need is a separation agreement.  And that can be a huge shock to people it has been amicable, they may even have an agreement that is signed between the two of them, but the bank will say it's got to be witnessed by a lawyer.  It's got to be an agreement under the Act.  

And that thing about it's got to be fair, if you hear from someone at a dinner party that is often a way it seems to come up, at the dinner party they say 'oh why did you do that agreement?  I got sued three years ago, I’m pretty sure this is what...'

What's his name down the road is the worst person to be getting legal advice from. 

Unless you live down the road from us.

What are some of the traps that some people fall into when they do try and do it themselves.

One is, we’ve already referred to, is having a false sense of needing to be generous whether because of a guilty conscience or because they are exhausted.

I have heard a guilty conscience lasts for 12 months.

That’s a good line.  

I think wanting to act quite hastily can be a problem. ‘Act in haste repent at leisure.’

That part of sometimes what we need to do is try to slow it down, while you want it all to be covered off, it actually is a little bit better to slow down and get it right as that agreement stands. 

I think it needs to be slowed down, that was the advice from the psychologist, that when you are in the most stressful situation that hopefully you are ever going to have to cope with its not the right time to be making decisions not the great time to be surging on with things and it’s the time to go and talk about your relationship, the time to go and get advice about yourself and weather you are cracking up or whether you are thinking straight and so forth and then get assistance in talking about the relationship because especially if there are kids. One of the worst things that can happen is a relationship end without a reckoning without... 

...time to speak... 

...without understanding and just on going anger and resentment and sorting yourself out and your relationship from the point of view of the humanity of the situation I think is really important.

And there are things like Parenting through Separation which is a 3 – 4 hour course you do on your own. 

Fantastic – it’s a fantastic course I highly, highly recommend it.

What was good about it?

I actually did it late on I wish I did it earlier but just really, really informative, great frame of reference I came away with... 

Actual practical strategies – how do you deal...

Really, really good.  And I guess how you can be constructive in your relationship when you are talking about children, what is going to be good for you and what is going to be good for your kids and what isn’t.  Because there are things that you think... 

That I probably shouldn’t be doing that but you go to a course at the right time, I think that was a really good course ah I definitely am not going to do that now and I definitely am going to do that, because I understand why that felt a bit funny when I did it, but actually now I understand that I –we can’t be perfect we can’t do it perfectly just get all the help that you can. 

And I would define that as one of the traps launching into your separation and division of property without thinking about the kids and the impact on the kids and the Parenting through Separation is credible so as with thy people are thinking about separation need to know about the consequences in terms of property division because it might help them make a sensible decision when they are under the stress of a difficult situation. 

The best advice on how it is affecting your children is important because otherwise you are going to blur the boundaries you are going to have someone who is bargaining with the children bargaining with property and that is awful that is just disastrous and horrible behaviour.

 Because of the belligerence Is one of the things especially in a relationship where they has been an uneven power balance the belligerence of one party cowers the other party and the Lawyers letter to either party is a great tool because if that letter is going to turn up in court later ion then the judge is going to look at it and say Mr Henderson you’ve said something to this person that just wrong you must of known it was wrong at that time, so as a lawyer writing that letter I know it’s going to be scrutinised and I’m going to be fair.                                                   

One of the things people, you mentioned ‘the most expensive lawyer in town’ - occasionally I’ve had people say to me oh I hope so and so goes to a rubbish lawyer and I say “No!”, I want them to go to the best, second best Lawyer in town and because a really good lawyer will give you, him / or her the same advice I’m giving you, you will be operating both of you knowing what the real situation is.

So dealing with that belligerence is what’s important and lots of relationships flounder because of an unfair Power balance and I can give you the 5 things that happen afterwards which are the things that are tactics that go wrong.

Ok the pattern of behaviour, the first thing that crops up is personal belligerence.  One person pressuring the other pressure, pressure, pressure, it can be benign but it’s pressure and heavy pressure, the guilt trip or my parents want, or your parents want, this is what I have done for you those things are pressure as much but not quite as awful as my friends are going to come around and beat you up so personal pressure if the first tactic that tends to get used.                                     

The second one is financial – freezing the accounts.

Withdrawing the money from joint accounts. 

Taking the money and saying that you spent it all so that it’s not there and you’re not going to get any anyway and that’s a similar kind of pressure but its financial. 

The third one is kids: suddenly someone who probably always thought that he or she was the parent of the year but was the one who worked and only saw them in the weekend is...suddenly becomes the parent of the year and wants to see them half of the time, I want them one week, I want equality and talks to the kids about it, threatens to take the children, “you’re a crap parent”, I’m going to go to [Oranga Tamariki] and report you, you raised your hand to so and so, so the children is the third avenue of attack. 

And the next one is I earnt all the money here, none of this is yours, you sat on your butt.

“I already supported you”. 

“I wanted you to go back to work.” 

Yeap, you’ve got all of that – that’s the fourth one. The fifth one is you’re mad.

Everyone knows you’re mad, your uncle is a schizophrenic, and a third cousin who committed suicide, bad blood in your family and I’m going to have you committed. 

Are you talking to me directly? (giggles) 

Mad and controlling is another one you know, you only have to I find, say to people once your controlling you have to control everything and to make them, it does silence them, it’s a brilliant tool, they will do everything to show they are opposite and that’s pretty awful, you really have to get that help to stand in your own kind of power and be like hang on a minute no I’m not.

And that help comes from the personal counselling that helps you cope with the demoralising situation and the legal counselling that says “No!”, if he does that again I’ll get a protection order for you. The courts not going to give him 50% share of this child’s life, the courts going to approach it on this basis, and knowing and feeling confident in the legal advice because you have been to a counsellor to help get your head straight those are the defences against those tactics.

And applying for spousal maintenance against the financial pressure so it is really useful to know what all these strategies are, because then you don’t take it so personally, you go - well we are familiar with these strategies, these are all strategies we have seen time and time again it’s what the judges say in the cases a lot of the time, we are familiar with this strategy. 

The person says no I don’t want to work in this high-powered career any more, 'I’m going to take a year off so you can try and apply for maintenance and child support but you won’t get anything'... yeah, the courts have seen that one before. 

Judges are quite smart people, generally. 

We are going to have a few podcasts on those things you know: “Can they really take the house?”.

Could you stay in the house?  Who gets to stay in the house?

What do I do for money?

How can I unfreeze frozen bank accounts? 

How can I get this capital out because I need it to fix my car? 

Yes, don’t go to a court go to a mediator as you did and that circumvents a whole lot of battling and expense caused ... get an agreement from the other side to go at an early stage to a mediator get a good mediator, it’s the best investment of your money is getting a good lawyer who will help you with those things.

We are going to do a session just on mediation and Shelley will be able to talk about her experience, but yours ... over all? 

Positive, as a personal point the night before the mediation I talked to Stuart and I said I don’t think we should do go to mediation because we are so very apart in what we wanted and the very wise Stuart said to me it is never a waste to go to mediation even if we don’t get a solution on that day or an agreement on that day you will be closer than you were before, but I thought it was a complete waste of time, but I think if you’ve got two people that are motivated to mediate right.

Which you usually are, you are paying half each for the mediator, they are not cheap, and you have done a whole lot of preparation work, you don’t just walk in off the street and you want it over, you are sort of imagining it over a little bit at that stage. 

And ok I am glad that advice was good advice but one thing mediators say which I guess is the sort of thing I was basing that on is once your mediation’s under way, start at 9 o’clock, deal with some anger and so forth, work through the issues start to clarify things and identify what the issues are. A really good mediator said to me once there is a time in the mediation where the magic happens, and it’s the build up its... 

The exhaustion – you’ve got to be careful of the exhaustion.

But it’s the opportunity for the people to talk to their Lawyers, talk to their mediators and just consider everything too. 

Talk to each other too.                                                                                                            

So that ass you say this is for another point but I talk about that because my advice that the best investment is early investment in a lawyer and a good lawyer who can organise something like that.

Agreed. 

Now we come to our last segment which is called The Best Question Ever. 

What’s the best thing a client has ever said to you?

...It’s very hard for a lawyer to say no or give advice not to do something because the lawyer... 

It’s not our call. 

No, it’s not our call but also we self-mythologise as these gladiators that are going to go out and win battles for our clients and get the gratitude of our client.

It’s what you want to do, you want to help them.

You want to be a hero, save the day and so on and so forth, there are not many feelings that are better. 

I had an old fellow that came to me once, and this isn’t a family court it’s a general one, but he had battles, he had battles with his neighbours, he had battles with the people who were administering the little set of houses he lived in, he had battles with the District Council and he... 

all of these battles had a degree of ... I could understand why he was fighting them there was a degree of bad behaviour often on both sides and I said to him, I let him talk to me, it took an hour and a bit to explain these things when he go to the end of the explanation I said to him is there anything else I need to know, I think I have a good understanding and I am ready to give you advice, he said thank you and he had all these battle she wanted to fight and I said to him well here is my advice:

Stop now, don’t take this any further, this battle is likely to end up this way, this one you might win, this one um I think honours are even there and your likely to get as much as you give, I said so stop, do this and do that but stop living your life by fighting everyone around you and he said do you know I’ve been to several lawyers and I thought you bugger you’ve been to several Lawyers before me, I’ve been to several lawyers and no one has told me that and I think your right, now it wasn’t hard to say to him don’t do this, don’t do that but when you are a lawyer looking at the opportunity of winning a battle for someone...

Prove that guy’s an idiot and that one’s ...

It’s hard to say yes I can win this but there is a 60% chance I won’t win this but my brilliance will get you there at my hourly rate of course...

It’s probably not worth it. 

Harder to say: “No don’t do this anyway”. 

Nice, best question ever – best answer ever.

Maybe the best advice to a client also. 

Well no, no sometimes you have to do battle, sometimes you’ve got to do battle to beat that belligerence from someone and even the scales up and sometimes it takes a lot of courage to recognise that justice will only be served if you take these difficult expensive steps and get to that point. 

Well thank you Stuart, I hope we are obviously going to have to get you back on for future sessions especially that one on mediation will be awesome, but thank you for joining us it has been a privilege.

Thank you for the opportunity.

This has been Divorce Café and we hope you have enjoyed it and maybe picked something up, tune into another episode if you are interested, have a look at the article on the website there is more information there and see you next time. 

Lovely.