Q: My husband and I are separating after 14 years together. We met at work, where we were both earning the same amount. Since then, I’ve had more than 10 years out of the workforce looking after our children, while my husband has built a successful career. Now my earning potential is less than a third of his. I’m happy to go back to full-time work but I won’t be able to afford a mortgage in our area (or even nearby). It doesn’t seem fair.
A: We see this issue frequently in our practice – one party takes on greater responsibility for care of the children, while the other pursues a successful career.
Even when both partners work, one may need to take a lower-paying role without career development, so the family can benefit from greater flexibility or part-time hours.
This situation can also occur when a couple moves location, sometimes frequently, for the advancement of one partner’s career. This can make it hard for the other person in the relationship to move their career forward at the same rate, (if at all).
While two people have made these decisions together, after a separation one of the parties is starting over in a much stronger position financially. There are two ways the court can address this imbalance:
1. Unequal sharing of relationship property
Generally, in a separation, the law requires the relationship property to be split equally between the parties.
However, the court can rule that one spouse should receive more than a 50 per cent share at the end of a relationship, if all the following circumstances exist:
- the income of one partner is likely to be significantly higher than the other
- the living standards of one partner are likely to be significantly higher than the other
- these factors are due to the division of functions in the relationship
- it is just to make a compensatory award, given the circumstances of the case.
The court will consider the ongoing responsibilities for care of any children from the partnership, the likely earning capacity of each partner in the future, and the likely earning potential of the disadvantaged partner, had they not stepped back from their career to care for children or benefit the partnership in some way.
Other factors that can influence the court include the age and health of each party, and their choice whether to pursue a career or not.
To remedy any imbalance, the court may decide that the disadvantaged party will receive, for example, a 60 per cent share of the relationship property.
Alternatively, a lump sum of money could be paid by one party to the other, as part of the relationship property settlement.
To date, there haven’t been many cases of this type progressing through court.
Most are resolved between the parties. Of the cases that have gone to court, the claims have been more successful where the income of one party is high (say $200k or more per annum) and that person has been in a corporate role or profession, while their partner has sacrificed their career to look after young children or has worked in a role with little advancement, for the benefit of the whole family.
2. Spousal maintenance
The second way the courts can address this imbalance, is by awarding spousal maintenance. This is financial support provided by one partner to another when the relationship ends. These payments are only temporary, often between 12 and 36 months, to allow time for the other spouse to get back on their feet.
This can be a good solution if one of the partners needs to up-skill before going back to the workforce, or to get them through the first couple of years while they build their career up again.
You may wish to seek professional advice as every situation is different, and a fair financial split will impact your quality of life as you move forward.
I recommend you try to reach agreement with your husband without proceeding to court, as the court process can take up to 18 months and is often costly and stressful. A lot of people find they can reach amicable solutions without breaking the bank.
More importantly, resolving issues out of court helps to preserve family relationships at an already difficult time.
This article first appeared in NZ Herald.