Q. My partner and I are separating after nearly 4 years together and we are still friends at this stage.We were saving for a house, so there is about $500k in term deposits and our joint bank account, which we are still using for shared expenses until our lease is up in a couple of months.My partner has some debt relating to a business she used to own, as well as credit card debt. She has always said that these were her responsibility.Last week she paid off her credit card and part of her business loan from the joint account. When I asked her about it, she said that since we weren't using it for a house anymore, she thought she may as well pay the debts off and it would just come out of her share. She also drew out $5k in cash.I feel like her parents blame me somehow for her situation and are advising her about the money. Now I'm starting to wonder how safe it is!

A. It certainly wouldn't be the first time that well-meaning friends and family derailed what could have been a peaceful separation. This is a difficult situation, as you would like to be able to trust your partner and to remain on good terms, but you also want to be able to sleep at night knowing your money is safe.

Your joint bank account

If you believe your money is immediately at risk, you can apply to the court to put a freezing order in place, until your relationship property settlement has been finalised. This is something that can be done very quickly, and without notifying your partner in advance.

A simpler step would be to ask your bank to suspend your accounts. They will generally do this if there is a dispute over who owns the money, or who has use of the accounts.

A suspension means no transactions can be made by you or your partner, until you have reached agreement and completed a new mandate (a mandate says who can use an account and how). If you can't agree on this, then you might have to go to court where a judge will decide how the money will be divided.

If you have any doubts, then I'd advise you to suspend the account immediately until a formal agreement is reached with your partner. Once the money has left the account, it is often difficult to retrieve - even if you're the legal owner.

Depending on how your account is set up, you may be able to move the full amount you consider yours, into a personal account right away. If you don't want to break your term deposits, see if you can put controls in place, so transactions over a certain amount have to be approved by you both.

Your partner's debt

You mention that your partner said she would shoulder the responsibility for her own debts. If spouses haven't committed to a future together, it is quite common for them to agree that particular debts or assets will belong solely to one person. However, be aware that unless this has been documented in a signed and witnessed legal agreement, it won't be legally binding.

Once you have been together for three years, generally speaking, your assets become relationship property, and so do your debts. This can include credit cards and business debts and is irrespective of whether the debt is in the name of one or both of you. However, there are some instances where assets and debts remain the separate property of each person.

Debt is generally considered "relationship debt" when it is incurred for the benefit of the relationship or property pool – for example if your partner's business provided the income for your household. If this wasn't the case, and you weren't personally involved in the business, then this debt would likely be classed as "separate debt" owned solely by your partner.

Credit card debt also follows these principles: Was the debt incurred buying a holiday for you both, or to pay your day to day household expenses? If so, this would be relationship debt. If the amounts were for your partner's personal expenditure, or incurred prior to your relationship, then the debt belongs solely to her.

In any case, your partner may still decide that the debts should be paid from her share of the relationship property. Quite often relationship property is divided according to what a couple believes is fair, rather than to the letter of the law.

If your partner has paid off personal (separate) debts from your relationship property funds, then the law allows you to be compensated for this. You would receive a greater portion of the relationship property.

Summary:

It's a good idea to address the topic of bank accounts as soon as separation is discussed. This gives everyone peace of mind and avoids the sort of quandary you are describing. It can be a difficult subject to raise, I know, but sooner rather than later is better. If you do have concerns about money in a joint account, trust your instincts and take action to protect yourself.

Debts may be considered relationship-related or separate depending on whether or not they were incurred for the good of the relationship or property pool. Just like a prenup agreement protects assets, you can have a legal document drawn up to protect you from your partner's debt. For those that want absolute clarity about who owes who and how much, this may be the option for you.

This article was first published in the New Zealand Herald.