Separation and divorce sit among life’s most emotionally draining experiences. When shared property and finances are involved, the complexity can feel overwhelming. Knowing where to start, and who to turn to, makes an enormous difference.
Peter Barry, one of our Mortgage Advisers at CM Financial Advisers, sees this regularly. “Unfortunately we see this often, but we can help our clients, either together or separately, work through the financial implications of separation,” he says.
What happens to the family home?
The family home is often the biggest financial asset a couple shares. Deciding what to do with it is rarely straightforward. There are usually three paths to consider:
- Should one partner buy the other out?
- Is selling and splitting the equity the most practical option?
- Can one person realistically carry the mortgage on their own?
These are significant questions with real financial consequences. Our team works through the numbers with you to help identify the best path based on your specific circumstances. It is not a one-size-fits-all answer.
How a Mortgage Adviser can help
Bringing a Mortgage Adviser in early means you have a neutral, expert voice who can give both parties clear, unbiased guidance. This often helps avoid the conflict and costly legal disputes that can arise when financial decisions are made without proper advice.
Our Mortgage Advisers, will assess both financial positions, review mortgage affordability, and walk you through your options clearly. Specifically, the team can:
- Confirm whether one party can afford to take on the mortgage independently
- Help transfer the mortgage into one person’s name
- Arrange a new mortgage if someone needs to start fresh in a new property
Don’t overlook your insurance
Insurance is another piece of the puzzle that needs attention during a separation. Judy Steiner, who specialises in both mortgage and insurance advice, is well placed to help here. “In my years as a Mortgage and Insurance Adviser, I’ve found that being the calm, practical voice in the room really helps people through separations. Providing stability during one of life’s most unsettling transitions,” she says.
Joint policies may need to be split, and your new circumstances will likely call for different or additional cover. Our Personal Insurance Advisers can review your existing policies and make sure you’re properly protected going forward, whatever your situation looks like.
What about KiwiSaver?
KiwiSaver is one asset that often catches people by surprise during a separation. The rules about how it is divided depends on when the contributions were made.
The portion of your KiwiSaver fund that existed prior to the relationship is ‘separate property’ and doesn’t need to be divided. On the other hand, any contributions made during the relationship (and the growth they have generated) are classed as ‘relationship property’ and up for division in a split.
When can the funds actually be accessed?
Even when KiwiSaver funds are up for division, they generally can’t be withdrawn until age 65. To work around this, couples sometimes choose to rebalance other assets instead. For example, if you’re keeping your KiwiSaver, your partner might receive a larger share of another asset to offset their interest in your fund. Your solicitor will help you decide on matters of your relationship property.
Moving forward with clarity
Whether you’re staying in the family home, selling and downsizing, or looking for somewhere new to start fresh, the team at CM Financial Advisers are here. We can give you the clarity and support you need to make smart, informed decisions at a difficult time.
If you’re going through a separation, don’t face the financial side alone. Get in touch with our team in Hawke’s Bay today.
