Your guide to Relationship Property
A basic summary of the law of relationship property division.
Our relationship property team has years of experience managing complex and emotionally challenging legal issues that arise when a relationship ends. We are also experts in drafting and advising on Contracting Out Agreements (commonly known as prenuptial agreements) and applications to the Family Court to dissolve marriages.
Who is affected by the legislation?
The Property (Relationships) Act 1976 applies to anyone who is married, in a civil union or a de facto relationship. While it is quite well known that it applies when a relationship ends by separation, it can come as a surprise to learn that it also applies when a relationship ends when one of the couple dies.
What is a de facto relationship?
Usually, a de facto relationship commences when you and your partner have been living together in a relationship. Although living together is a strong indicator of being in a de facto relationship, couples who don’t live together may still be captured by the Act even if they don’t live under the same roof. The Courts consider a list of factors not limited to living together when determining if two people are in a de facto relationship.
Many people will know that the family home is divided 50/50 once a couple have been in a de facto relationship for three years, but there are instances where the law provides for the non-owning partner to claim a share of the other partner’s property where they have been in a de facto relationship for less than three years if there is a child of the relationship or the non-owning spouse has made a significant contribution to the de facto relationship.
What happens when you separate?
All relationship property will be divided equally between the parties to the relationship.
Relationship property includes:
- the family home (regardless of whether it is only registered in one spouse’s name or contributions to the purchase price);
- family chattels;
- bank accounts;
- increased income earned during the relationship;
- all property owned jointly;
Separate property does not need to be divided between the parties.
Separate property includes some property owned prior to the relationship, gifts, heirlooms, inherited property, property received as a beneficiary under a trust or by survivorship.
What happens when one party dies?
The survivor has two options:
1. Option A: to receive half of the parties’ relationship property; or
2. Option B: to receive the property left to them in the deceased’s will.
It is important to note that your partner gets this choice regardless of what your Will provides.
How can you protect your assets?
Parties to a marriage, civil union or de facto relationship can reach their own agreement about what will happen to their relationship (and separate) property during the relationship and if they separate. If the agreement is validly entered into, then that agreement applies to the parties and the Property (Relationships) Act doesn’t apply.
For such an agreement to be valid, it needs to be in writing, both parties need to receive independent legal advice on the agreement (separate lawyers) and the agreement must be signed by both parties and certified by each parties’ lawyer.
What is a contracting out agreement?
A contracting out agreement is a binding agreement which clearly identifies the assets and liabilities owned by each party prior to the relationship and sets out the parties’ agreement as to what will happen to these if they separate or if one party dies. It can also include how assets or liabilities that are acquired during the relationship will be dealt with upon separation or death.
When do you need a contracting out agreement?
If you enter into a relationship and want to protect your assets, we recommend entering into a contracting out agreement. We are often asked to prepare contracting out agreements for client’s purchasing their first home when they will have their partner living there with them.
Are you separating?
Separating from your partner can be an extremely emotional and stressful time. It may be difficult to know what you are legally entitled to. Communication with your former partner or spouse may break down or be really difficult.
What is a separation agreement?
A separation agreement allows separating spouses or partners to agree on the division of relationship property without the need to go to Court. We can advise as to the law that applies and negotiate a fair division of relationship property between both parties. Separation agreements also need to be in writing, signed by both parties and both parties need to receive separate legal advice on the agreement.
What if we can’t reach agreement?
If you and your ex spouse cannot agree on how you should divide your property, proceedings can be filed in the Family Court to get the Court’s assistance in achieving a resolution. Proceedings in the Family Court put both parties under strict timeframes and ensure full disclosure of each parties financial position, which can be helpful if your ex spouse is not engaging with you about relationship property, or they won’t disclose their financial information to you.
When can I dissolve my marriage?
You can ask the Family Court to legally end your marriage if you have been separated and living apart for at least two years and at least one party to the marriage is domiciled in New Zealand. You do not need to have resolved all relationship property matters to dissolve your marriage but you do need to satisfy the court that arrangements have been made for the day to day care of any children of the marriage and other aspects of their welfare.
How can we help?
We understand that each relationship is unique. The combination of assets brought to the relationship together with those assets acquired during the relationship can sometimes result in a quite complex situation. We want to understand your individual circumstances so we can ensure we provide the best advice possible.
Our specialist team is ready to help, whether you need a contracting out agreement or a separation agreement or whether you want to dissolve your marriage or simply get advice on your entitlements when a party to the relationship dies.
We are also experts in conducting court matters if agreement cannot be reached between the parties by negotiation.
If you would like advice, please get in touch with one of our relationship property experts.
IMPORTANT: The information in this article is of a general nature only and does not constitute legal advice. Tavendale and Partners do not accept any liability for any reliance placed on the information contained in this article and shall not be liable to you or anyone else for doing something, or omitting to do something, on the information provided above.