Author Archives: Family Team

Shared care arrangements

The current circumstances are both unprecedented and difficult. This time of uncertainty is made more challenging by the need to juggle shared care arrangements of children.

The following is intended to be information that parents and caregivers may wish to consider in light of the fact that New Zealand is currently at COVID-19 Alert Level 4.

Best interests of the child
In respect of care of children during this time, the overriding consideration as always is for parents and caregivers to make decisions that are in the best interests of their children. However, it is now important to do this while remembering that the purpose of Alert Level 4 is to prevent the spread of COVID-19.

During this time, it is important to remain, as much as possible, in your self-isolating unit or “bubble”.

In cases where there is a shared care arrangement in place, parents and caregivers will need to consider whether the shared care regime should continue or whether a child should remain in place for the initial four-week lockdown period.

Parents and caregivers should discuss if shared care arrangements would allow COVID-19 to potentially spread without them being aware and reach an agreement between themselves. This may mean the child needs to stay with one parent/caregiver for the initial four-week period.

Maintaining shared care arrangements
The guidance from the Principal Family Court Judge is that children in shared care arrangements in the same community can continue to go between households unless:

  • The child is unwell;
  • Someone in either home is unwell;
  • Someone in either home has been overseas in the last 14 days or has been in close contact with someone who has the virus or is being tested for the virus.

There is currently no definition of “in the same community”. Where the shared care arrangements involve caregivers in different towns, the guidance is that the safety of the children and others in their units should not be compromised by movement between those homes.

Parents and caregivers will need to use their judgement, taking a socially responsible and common sense approach, as to whether the households in a shared care arrangement are in the same community. It is possible that the government may put measures in place to restrict the movement of people other than those considered essential services for the purpose of carrying out those services. Parents and caregivers should consider that travel may be restricted before arriving at their own arrangements in relation to shared care arrangements, particularly if these involve travelling considerable distances to transport children between households.

Factors to consider
It may be possible to maintain the integrity of your bubble across two households for the purposes of maintaining a shared care arrangement. However, it remains important that the integrity of your bubble is not compromised further. The following are matters to consider when thinking about the integrity of your bubble:

  • Are there only two households involved or are there people coming and going from more than two households (for example where there are children from two shared care families being cared for in one household)? The advice from the Principal Family Court Judge is that the safety of all concerned should not be compromised if there are more than two households involved.
  • Are any of the people in either household vulnerable? If so, extra care may be warranted. If your care arrangements involve households where grandparents are also living, for example, consideration may need to be given as to whether people in either household should be going to the supermarket to shop. If online shopping is not possible for both households, alternative care arrangements may need to be considered.
  • Are any of the people in either household essential workers? Essential workers are at higher risk of contracting COVID-19. Shared care arrangements where one of the caregivers is an essential worker (or has close contact with an essential worker) compromise the integrity of the bubble for all households involved in the shared care arrangement. Care arrangements may be need to adapted in the short term to ensure that the integrity of a household’s bubble can be maintained.

Consolidation of care arrangements
Parents and caregivers may also need to consider short term variations to care arrangements to limit the number of times children travel between homes. Parents and caregivers may wish to consider consolidating their care arrangements over this time into larger blocks of time for each caregiver. For example, it may be more appropriate for a child to spend the first two weeks of lockdown with one caregiver and the second two weeks with the other caregiver. This 14-day period would have the advantage of aligning with the recent self-quarantine guidelines for people returning from overseas and may provide some assurance that no one in either household has developed symptoms over that 14-day period. Other consolidation arrangements may also be appropriate.

Movement between households
Where caregivers decide that moving between households is appropriate, children should be accompanied by an adult when moving between homes. Private vehicles should be used to transfer children between households wherever possible.

We would also suggest that where parents are travelling between shared care homes, they have copy of the parenting order or agreement (if one exists) with them (either in hard copy or electronically on a device) in case they are stopped by police.

Indirect contact where children cannot go between households
The Principal Family Court Judge has indicated that where children cannot move between households, she would expect indirect contact – such as by phone or social media – to be generous. The same expectation would apply in cases where care arrangements have been consolidated over the four-week lockdown period.

Priority proceedings and enforcement of existing arrangements
The Family Court is an essential service and will continue to operate through all pandemic alert levels but on a reduced capacity, dealing with priority proceedings.

Priority proceedings in the Family Court relevant to children, include:

  • Urgent matters of safety, such as to protect a person from family violence or to protect a child from unsafe parenting; or
  • Urgent care and protection concerns that require Government intervention for a child via Oranga Tamariki.

Please talk to a member of the Haigh Lyon family team in the first instance if:

  • You are unsure as to whether you have an issue considered a priority proceeding; or
  • Any urgent issues arises for you during this period that may necessitate a priority proceeding.

Caregivers should be aware that the courts will have extremely limited capacity to address enforcement measures in relation to existing care arrangements or parenting orders during the lockdown period (outside of the priority proceeding referred to above). Parents and caregivers are strongly encouraged to reach their own agreements in respect of care of children during this time. However, if they are not able to do so the court will not intervene to uphold existing agreements for the time being unless the criteria for a priority proceeding is met.

Caregivers should nevertheless be aware that the court has indicated that the pandemic should not be seen as an opportunity for parents and caregivers to unilaterally change established care arrangements without cause or otherwise behave in a manner inconsistent with the child’s best interests or the court ordered care arrangements.

Further information and assistance
Caregivers must put aside their conflict at this time and make decisions that are in the best interests of the child and their families and the wider community. We appreciate this may be difficult for caregivers who have been in conflict over care arrangement.

Further information and updates families are referred to the Unite against COVID-19 website (https://covid19.govt.nz/).

Should you require additional advice in respect of managing your share care arrangement during this time, a member of Haigh Lyon’s family team can assist. The Haigh Lyon family team remain available throughout this period working remotely, should you wish to discuss anything via email, phone or online video conferencing.

Spousal Maintenance; How New Zealand Stacks Up

How do the New Zealand courts deal with spousal maintenance?
It is important to note that spousal maintenance in New Zealand (from one adult to support the other adult) is different to child support (for the children).

In New Zealand spousal maintenance is payable if, following separation, one party is unable to meet their reasonable needs. If that party can demonstrate that their inability to meet their reasonable needs arises because of one of the qualifying circumstances, then spousal maintenance may be payable by the other party.

The ‘qualifying circumstances’ are slightly different depending on whether the parties were married or in a de facto relationship but include things such as responsibility for care of children, standard of living during the relationship, earning capacity and the effect of the division of functions within the relationship. It is important to note that we have a ‘no fault’ system in New Zealand so it does not matter if one party behaved poorly in the course of the separation.

When considering an application for spousal maintenance, the court will look at the claiming party’s budget of their ‘reasonable needs’ together with the other party’s budget and what that person might reasonably be able to afford to pay.

In New Zealand, spousal maintenance is generally an interim measure and the recipient is obligated to take the necessary steps to support themselves within a reasonable period of time. The precise length of any necessary maintenance payment will largely depend on the circumstances of the parties involved. The obligation to pay maintenance in New Zealand ends when the receiving party enters into a new de facto relationship.

How does this differ from other countries?
Unsurprisingly, the law on this issue varies across boundaries. A few of the most noticeable differences arise in the USA and UK, including:

  • The qualifying circumstances and amount of maintenance payable; and
  • The length of time for which maintenance can be payable.

USA
In the USA, laws on alimony (as it is known) vary significantly across states. In some states, alimony is only awarded in marriages or civil unions of 10 years or longer and domestic violence can be a valid ground to make a claim. In some states, the person who was ‘at fault’ for the end of the relationship may be relevant (i.e. if the party claiming alimony had an affair, that may be a factor in deciding whether they should receive payment).

There are sometimes limits placed on the amount of maintenance payable, such as the lesser of $5,000 per month, or 20% of the paying party’s income.

Other states (such as New York) do not impose the same strict guidelines on qualifying circumstances or amounts of maintenance, and allow judges to make decisions that they consider best in the specific circumstances of the parties.

Across the USA, ‘temporary alimony’ continues to be the most common type of award, with the length of payments sometimes based on the length of the relationship. It is worth noting though, that ‘permanent alimony’ (i.e. payment for life) does exist in some states and is awarded in circumstances which are considered appropriate.

UK
In the UK, the qualifying circumstances for spousal maintenance and the way in which awards are calculated have similarities to New Zealand law. However, what is noticeably different, is the length of time which maintenance payments can continue for.

As is the case in the US, spousal maintenance can be paid for a fixed term (such as until the youngest child turns 18), or it can be payable for life (until the paying party dies). The latter are often coined ‘meal ticket for life’ orders and are widely reported on in the media. These awards appear to have become less common in the UK and the Courts have increasingly applied the ‘clean break’ principle which ends financial ties between separated parties at a point in time which is considered fair.

The 2015 UK case of Wright v Wright made headlines around the world after a Judge suggested that the ex-wife of a wealthy veterinarian should ‘get a job’ to help supplement the spousal maintenance she was receiving, now that the children were over 7 years of age.

Despite this, spousal maintenance in the UK is still considered one of the more generous across jurisdictions and ‘joint lives’ maintenance awards continue to be made. The question as to whether ‘joint lives’ orders are appropriate is hotly debated by lawyers and legal writers, with many calling for law reform in this area.

How does New Zealand measure up internationally?
Spousal maintenance in New Zealand is not as generous as some jurisdictions in terms of the length of time for which it is payable. The very broad and potentially lifelong obligations sometimes seen in the UK and USA, whilst not inconceivable under New Zealand Law, are extremely rare and would arguably be contrary to the spirit and intent of the Family Proceedings Act 1980, which governs spousal maintenance in New Zealand. There is an obligation on the receiving party to meet their own reasonable needs at some stage.

However, our law does ensure that the actual ‘reasonable needs’ of both the claiming party, and the paying party, are taken into consideration. Rather than applying limits to the amount of maintenance payable, each New Zealand case is decided based on the specific circumstances of the individuals involved.

Inter-generational loans for first home buyers

With New Zealand’s over-heated property market, which is seeing $1m+ average house prices in Auckland, it’s harder than ever for new generations to get onto the property ladder. A lot of families are having to be creative, which is seeing more and more children turning to their parents for help.

Meet Art and Matilda, a young couple who are keen to buy their first home together. They have cut back on extravagances and have been saving hard, but don’t quite have enough for the 20% loan-to-value bank requirement (LVR).

Art’s parents have generously offered to help them to make up the difference. But they are concerned about Art and Matilda’s relationship long term, and want to protect their contribution whilst satisfying the bank’s requirements.

There are three common ways to structure the arrangements between parents, children and their partners:

  1. Art’s parents’ loan is recorded in a loan agreement and secured by second mortgage over the property (but the bank will need to consent to the second mortgage);
  2. Art’s parents take an interest in the property equal to the share of their contribution. So if they contribute $120K for a $600K property purchase, they are recorded on the title as registered proprietors with a 20% share. Art’s parents can share in any potential increases or decreases in capital value. However other than reducing the LVR for their 20% contribution this approach won’t help Art and Matilda with their overall LVR issue (so would need an additional step, below); or
  3. Art’s parents gift the funds to Art. In order to satisfy LVR restrictions set by the Reserve Bank, banks are now requiring parents to provide evidence that their contribution is a gift that does not require repayment.

The next issue is how best to treat the arrangement between the young couple and Art’s parents.

Given Art’s parents’ concerns, they may choose to make their contribution as a gift to Art only, and have the gift recorded in a Deed of Gift.

If Art applies the gift to the acquisition of a family home for him and Matilda it is going to be captured by section 8 of the Property (Relationships) Act (the PRA). In order for the gift to retain its separate property status, Art and Matilda would need to enter into a section 21 agreement contracting out of the equal sharing provisions of the PRA, ring fencing the gift as separate property.

This next part is equally important. As it’s unlikely that Art and Matilda have the financial resources to pay for independent legal advice, Art’s parents may have to financially assist both Art and Matilda to meet their respective legal fees.

Ensuring that both parties receive competent, independent legal advice is essential in order to ensure that the section 21 agreement is not challenged at a later date for lack of independence, inadequate advice and/or because it was so restrictive it had become seriously unjust.*

It is important to consider not just the bank’s requirements, but also how best to protect generous parents and/or lucky children to ensure all interests are protected.

Banks will often dictate the arrangements. However, a section 21 agreement (and perhaps a property sharing agreement in the case of option 2 above) is a vital tool in recording the underlying intention of the parties.

Our Family team would be happy to discuss your options with you.

Where there’s a valid Will, there’s a clear way

We live in a fast paced world, with a focus on today and the very near future. Which is why people rarely think seriously about their Will. We’re invincible and there will be a long term, right? Formalising your last wishes shouldn’t be an afterthought because anything can happen.

Let’s meet William. He’s 29 and loves to travel and surf. He has an amazing surfboard collection, and has been saving for a house. He also has $25,000 in his KiwiSaver fund.

William made a Will just prior to getting married to his partner Fortune – they have a child together. Life can take lots of twists and turns so let’s look at different scenarios should William’s circumstances change, or worse, he meets his maker.

Marriage and William’s Will

William’s Will was not made in consideration of his marriage. So under section 18 of the Wills Act 2007, whatever happens, this Will is revoked (rendered null and void) because he subsequently married Fortune. It’s the same deal if they entered into a civil union. If his Will states it is made in “contemplation of marriage” or “civil union”, then the Will is valid.

Dying without a Will

Let’s say William didn’t create his Will, but he wanted his best friend Mick to get his surfboard collection if he died. If William dies without a Will, the Administration Act 1969 applies to the distribution of his property.This means that specific people will receive a share of his property, but it may not  be distributed in the manner he intended, as follows:

  1. Fortune would receive all of William’s personal chattels (including his surfboards);
  2. Fortune would receive the first $150,000 of William’s estate;
  3. Fortune would receive a 1/3 share of the residue (if any);
  4. The remainder of William’s estate (if any) would be held on Trust for his child.

Even if Fortune knew William wanted to gift his surfboards to Mick, without a Will in place, there’s no guarantee Mick would receive the surfboards. It’s Fortune’s choice.

What would happen to William’s KiwiSaver fund without a Will?

If William has no assets other than his KiwiSaver account, his provider will require Letters of Administration from the Court before they will pay out funds. This process can take up to eight months or longer if there is a dispute, and can cost up to $2,500. This additional time and cost would be avoided if William had a Will.

How does Separation impact a Will?

William has a Will and leaves all of his estate to Fortune, but then they separate. Should William update his Will? Yes, because Separation does not automatically revoke a Will. In the absence of a formal separation agreement or dissolution of marriage William will need to change his Will to exclude Fortune.

Like a Marriage Separation, the end of a de facto relationship does not automatically revoke a Will either. Again, to prevent gifts passing to Fortune, William needs to change his Will.

The moral here is, create a Will that is on solid ground and keep it updated. We’re known for our thoroughness and paying attention to the details, to ensure the best outcome for our clients. For help with forming and editing Wills, please contact our Family or General teams.