How to protect your home in ‘splitting season’

January has a certain reputation in the lawyer world. It’s splitting season.

Turns out after being cooped up together through Christmas and the summer break, suffering visits from the in-laws, and the financial burden of presents, some of us just can’t stand the sight of each other anymore.

Happy holidays, or something like that.

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Ask a lawyer and they’ll tell you the biggest thing at stake is the family home.

It’s the biggest asset for many New Zealanders, but likely to be hocked as part of the separation agreement.

It doesn’t matter whose house it was when you got together. After three years together, if you haven’t decided otherwise, the default is that home is considered shared property.

The financial devastation continues when you look at the most recent New Zealand Relationship Property Survey 2019 – it shows you’re in the relationship danger zone if you’re in your forties, and have been together 10-20 years.

That’s right as you should be hitting your peak earning years.

So having to sell your house, forking over thousands to a lawyer, and starting all over again is not ideal.

Look, life is too short. If the relationship ends, sometimes it does. But there are ways to at least limit the financial wreckage while you mend a broken heart.

The best, simplest thing you can do is get a pre-nup.

Some might want to put their property in a trust, but there's been notorious cases of ‘trust-busting’. Trusts aren’t as secure as many think, so you’re taking a risk for the sake of avoiding a delicate conversation.

I know some don’t like the idea of a pre-nup. But it’s not planning for your relationship to fail.

You’re sitting down, talking about the expectations you each have for the relationship, and what each of you expects the other to contribute.

If one of you takes time off to look after the kids, are they still entitled to an equal share if you split up later? If one of you already owned the house before you got together, should you split it 50/50 if you break up 15 years from now?

What about if someone bought the house on their own, but you pay off the mortgage together? Or do you have kids from a previous relationship, and so want to make sure they don't miss out?

Actually talking about it is an opportunity to see how each of you feels about money, and how you would like to handle it, before the ink dries on the marriage certificate.

Money impacts everything about your lives together, so if you can’t face talking about it you’re setting yourself up for a lifetime of problems.

On the flip side, if you can talk frankly about your money goals, you can probably handle anything together.

Nobody plans to split. But plenty do, so you might as well have a calm discussion about how that might work if worst comes to worst.

Now, full disclosure, I don’t have a pre-nup with my husband. But we got together when we were teenagers.

Frankly, every bit of what we have now, we fought for together.

If I was to get together with someone after I’d already started building my financial life, you can bet that between the soppy love notes, I’d also want to sit down to talk about our financial expectations of each other. Then commit it to paper so we don’t have to think about it again.

- Frances Cook is the host of the personal finance podcast Cooking the Books. She is not a financial adviser, and all information is general in nature. For individual advice, see a financial adviser.

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