OPINION
Q: My wife and I separated last year after a marriage of 10 years. We are negotiating the division of relationship property through our respective lawyers. Yesterday, my ex-wife’s lawyer sent through a settlement proposal. In the proposal, in addition to half our assets, she asks for a lump sum payment of $150,000 as “compensation for economic disparity”. The letter points out she is working part-time as a secretary earning $70,000 per annum and her career progression has been constrained by childcare commitments, and if she had continued to progress her career, it would not be unreasonable to assume but for the division of functions during the relationship with me that she would now be earning approximately $120,000 per annum. What is economic disparity, and how do you suggest I respond? By way of further background, I am working in the IT industry earning about $150,000 per annum. Also, I believe my ex-wife could work fulltime and put the children (aged 7 and 9) in after-school care, but she chooses not to. Is this relevant?
A: What is economic disparity?
Relationship property is generally divided equally in New Zealand. Despite this, Family Court judges have the discretion to award one party compensation where there is a disparity between the separating parties’ income and living standards at the end of a relationship.
The intention behind economic disparity awards is to recognise that during the relationship, the partners may have arranged their affairs so that one partner had a greater focus on home-making and raising children, enabling the other to focus on their career. The consequence is that at the time of separation, the parties are not on an even footing. A “typical” case would be a wife or mother who has taken time out of work to raise children, enabling the husband/father to advance his career.