Case Study: Separation with Children
Case studies are a great way to see how the theory plays out in practice. While every situation is unique, reviewing different scenarios can be useful to you. Keep in mind that Crayon and our guests are not providing financial or legal advice, so be sure to consult a lawyer before making any decisions.
Meet Kairo and Amelia, who have been together for 20 years but recently separated. They each own and operate their own businesses and share three children, all under 18. Here’s what they need to consider.
Setting the scene
Kairo and Amelia are 45 years old and share three children - Aria (15), Nico (12) and Isla (9). All of their assets have been acquired during the course of their relationship.
Assets in their joint name:
The family home
A holiday home in Nelson
Bank accounts
Assets in Kairo’s name:
KiwiSaver
Shares in his building company
Assets in Amelia’s name:
KiwiSaver
Shares in her dental clinic
Investment portfolio in which she invested the $250,000 cash she received when her parents passed away recently
A house in the Coromandel that she also inherited from her parents
Asset and Estate Planning
Kairo and Amelia will need to engage different lawyers because their interests are no longer aligned as they have separated. They should be encouraged to agree on, and execute a separation agreement that addresses issues such as:
What date they separated (this is important as you can only request a divorce once you have been separated for two years or more).
What assets are Separate Property: Amelia’s Separate Property likely includes the investment portfolio and the house in the Coromandel. These are Separate Properties because they were an inheritance that Amelia has kept separate (in her own name and isolated from joint assets) and not intermingled with Relationship Property.
What assets are Relationship Property: all of their assets except for Amelia’s investment portfolio and the house in the Coromandel will be Relationship Property because they were acquired during the course of their relationship.
How Relationship Property assets will be split between Kairo and Amelia.
Custody arrangements for the children.
How costs associated with their children will be split.
Kairo and Amelia will need to agree on valuations for their respective businesses and how shares in these companies will be divided. Presumably, Kairo will want to keep the shares in his building company, and Amelia will want to keep the shares in her dental company.
If the valuations of their businesses differ, then one person may need to pay compensation to the other. For example, if Kairo’s building company is worth $200,000 and Amelia’s dental company is worth $150,000, then Kairo either needs to compensate Amelia $25,000 or give her $25,000 worth of shares in his business.
Dividing assets during a separation can be complex, but with the right guidance and advice, it's possible to find a solution that works for everyone involved.
This is part of Crayon’s mini-series on asset and estate planning for parents:
Now for the important legal part: The information we provide is general and not regulated financial advice for the purposes of the Financial Markets Conduct Act 2013. Please seek independent legal, financial, tax or other advice in considering whether the content in this article is appropriate for your goals, situation or needs. The information in this article is current as at 3 February 2023.
All of our content is independent. Crayon provides you with accurate and valuable information you can use to make smart money moves for your family. We work with people we respect, and all collaborations are unpaid.
Sarah Kelly
Senior Associate, Private Wealth team at Dentons Kensington Swan
Stephanie Pow
Founder and CEO, Crayon
