Relationship split - differing incomes

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Kerry54321

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Topic # 248043 8-Mar-2019 15:48

Hi,

am separating from my wife of over 30yrs. I earn 85k (+car), she earns about 40k. Assets aside, what would be a reasonable recognition of this imbalance in incomes in terms of a lump sum payment in the settlement?

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Reply # 2193670 8-Mar-2019 15:52

Sorry to hear that.

Have you considered asking a divorce lawyer?

I for one would not even know why that is relevant, much less how to begin assessing it.

floydbloke

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Reply # 2193672 8-Mar-2019 15:55

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Opening a rather large can of worms. I suggest speaking to a lawyer.

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Kerry54321

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Reply # 2193674 8-Mar-2019 15:56

Yes, however they will not answer without being 'engaged' (ie start charging fees) and we are trying to settle amicably. Hoped to find someone with similar experience here..

Beccara

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Reply # 2193675 8-Mar-2019 15:57

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From my experience with this salary difference doesn't matter, Relationship property is split 50/50 and that's about that. Whats the argument for this lump sum payment?

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All comment's I make are my own personal opinion and do not in any way, shape or form reflect the views of current or former employers unless specifically stated

dafman

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Reply # 2193676 8-Mar-2019 15:58

Sorry to hear. I'm no lawyer, and I could be wrong, but my understanding is that the law only covers equal distribution of assets as at separation - there is no requirement for lump sums for income imbalances.

Linux

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Reply # 2193678 8-Mar-2019 16:01

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50/50 split on assets and debt

wellygary

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Reply # 2193679 8-Mar-2019 16:09

dafman:

Sorry to hear. I'm no lawyer, and I could be wrong, but my understanding is that the law only covers equal distribution of assets as at separation - there is no requirement for lump sums relating income imbalances.

Bzzt: it doesn't always have to be 50/50 ( and yes its a NZ based response)

https://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=12091865

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.

Its gonna come down to what assets there are,

and whether one or other parties will feel aggrieved with a 50/50 split.

if this is the case then the OP will need legal advice,

surfisup1000

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Reply # 2193680 8-Mar-2019 16:13

Beccara:

From my experience with this salary difference doesn't matter, Relationship property is split 50/50 and that's about that. Whats the argument for this lump sum payment?

A friend had to pay out his wife for the difference in careers while she looked after the kids.

tdgeek

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Reply # 2193687 8-Mar-2019 16:18

Yes, 99% sure it makes no difference. The 50/50 asset/debt split caters for the salary imbalance. After that you are both single and independent

tdgeek

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Reply # 2193699 8-Mar-2019 16:21

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surfisup1000:

Beccara:

From my experience with this salary difference doesn't matter, Relationship property is split 50/50 and that's about that. Whats the argument for this lump sum payment?

A friend had to pay out his wife for the difference in careers while she looked after the kids.

Thats Child Support not divorce settlement? There is a formula if one has custody or shared custody. IIRC, income less an allowance (IIRC 15k)n and 18% for first child. Unless they did an agreement and they decided to accept for salary difference?

Beccara

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Reply # 2193700 8-Mar-2019 16:22

surfisup1000:

Beccara:

From my experience with this salary difference doesn't matter, Relationship property is split 50/50 and that's about that. Whats the argument for this lump sum payment?

A friend had to pay out his wife for the difference in careers while she looked after the kids.

Might indicate that there wasn't enough asset to split to cover the incoming loss from one spouse. There are a few fringe cases but from my lawyer going through this has said cash settlements and shifts away from 50/50 are rare and have a somewhat niche set of circumstances.

Unless someone in this case is pushing for a cash settlement the best way to avoid lawyers and a court case would be to 50/50 split assets and debt's and call it quits

smcc

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Reply # 2193763 8-Mar-2019 16:59

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Doesn't matter how amicable you want to be, you should still consult a Lawyer. Most will have a short initial discussion before they bill you.

Even amicable splits can go off the rails. If your former partner decides they do not like the potential outcome you can be sure they will get advice, this may leave you more exposed than you would like.

Handle9

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Reply # 2193810 8-Mar-2019 17:16

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Kerry54321:
Yes, however they will not answer without being 'engaged' (ie start charging fees) and we are trying to settle amicably. Hoped to find someone with similar experience here..

You will need a lawyer at some point in this process to draft agreements and make sure they are correctly executed.

If you are talking about an extra $500 of costs to get proper advice at the start then imo it is well worth the investment. It has the potential to cost you far more than that at the other end.

solutionz

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Reply # 2193893 8-Mar-2019 18:16

Kerry54321:

Hi,

am separating from my wife of over 30yrs. I earn 85k (+car), she earns about 40k. Assets aside, what would be a reasonable recognition of this imbalance in incomes in terms of a lump sum payment in the settlement?

It's a difficult situation and I applaud you wanting to address this "reasonably".

As far as what is generally fair and reasonable; we have to assume that over the span of 30 years you have both contributed EQUALLY to the relationship - not necessarily equally financially but equal effort with her supporting your income potential

Obviously when you split you cannot split this intangible value that you will continue to benefit from so some proxy compensation is necessary.

Consider that the compensation is to address the inequity in potential (earning) opportunities going forward thus the manner of compensation may be contribution towards study/training so she can have the opportunity to increase her earning potential.

What's a reasonable figure?

Assuming no children the starting point could be half of the current difference in income (~$20k?) or between that and the going child support rates for you case assuming 1x hypothetical child ($10-$15k).

What's a reasonable duration?

The length of a degree - 3 years? So you could be looking at $30-$60k spread over 3 years.

What "discounts" to factor?

You could look at a ratio of the difference in income & assets before the relationship however after 30 years this starts to become irrelevant.

You can look at the "actual" cost & time necessary to bring her up to an equal footing.

A lump sum payment should incur an interest + opportunity cost / use of money discount.

I don't think a lawyer needs to be your first step if you can work this out reasonably between yourself - however any agreement definitely needs to be in writing to avoid possible issues.

https://www.findlaw.co.nz/articles/4419/spousal-maintenance-.aspx

As a yard stick if this was me I might be offering something like $40k cash/assets up front or $60k over 3 years. 30 years is a long time and I'd want to see the best outcome for the sake of both parties.

kobiak

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Reply # 2193904 8-Mar-2019 18:34

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If you are willing to settle in agreement. Without court involved, you put everything that you guys agreed on to lawyer who will prepare separation agreement, which will be presented to another party's lawyer. If all parties agree, sign everything and pay fees.

- lawyer fees would depend on complexity of agreement but 2-3k should be a good starting point. + if one party gets the property - change of ownership, title, etc - some fees there
- if you have mortgage too, talk to bank, they will need to make a new approval and do the paperwork

Did it last October and because we agreed on everything, just sign the papers and be gone.

helping others at evgenyk.nz

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