Discussing the possibility of death or separation is not something most people enjoy doing, however putting some time into planning for such events can leave both parties with peace of mind and certainty as to what will happen.
In New Zealand, relationships are governed by the Property (Relationships) Act 1976 (“The Act”) and it’s extended reforms. Under this Act, you have rights both if you are married and in a de facto relationship (living together), even if you don’t have a formal agreement between you.
The Act follows a number of principles. Men and women have equal status, and no form of contribution to the relationship holds more weight than the other (eg caring for children is just as valuable as wages). The courts are able to make orders under the Act in a number of situations.
What does “Relationship Property” mean?
The Act provides for two types of property (as in belongings, not just real estate). This is “relationship property” belonging to both of you, or “separate property” which is the property of just one person.
The Act provides that relationship property will be divided equally in the event of a breakup.
The family home and chattels are always considered relationship property, regardless of whose name they are in, or who paid for it. And as a general rule, all other property that is relationship property are those assets which were involved or used with relationship property, and both members of the relationship enjoy a common association with the property.
For example:
- Property bought during the relationship
- Property owned by either partner before the relationship began, but is used for the common benefit of both parties
- Superannuation paid for during the relationship
- Inheritances and gifts that were mixed with other relationship property (eg an inheritance used to buy the family car)
Separate property remains the property of the person who owns it. Under the Act, it’s not divided between the two parties to the relationship. A summary of the main types of separate property includes:
- Family heirlooms
- Property owned, bought, or acquired by one partner prior to living together a a couple
- Inheritances and gifts which a partner keeps separate (such as in a separate bank account)
Sometimes increases in value on separate property may be considered relationship property, for example where a partner used their time, effort and money to renovate an existing property their partner owned, and as a result of that contribution, the value increased.
What types of relationship are provided for?
The Act is designed to provide a framework for a variety of relationships and seeks to provide for fair outcomes. It will apply to you if your relationship is any of the following:
- A marriage or civil union (including same sex)
- De facto relationship for 3 or more years
- De facto relationship of under 3 years with a child, and where not making an order under the Act would cause serious injustice.
- De facto relationship of under 3 years where a partner has made substantial contributions to the relationship and not making an order under the Act would cause serious injustice.
In the case of those de facto relationships where the duration is less than 3 years, the property is generally divided in accordance with each partner’s contribution to the relationship.
What are “contributions” to the relationship?
In situations where a de facto couple have been in a relationship for less than 3 years, but not to make an order would cause serious injustice, each partners contribution to the relationship is considered.
This includes non-monetary contributions such as work (eg to increase the value of a property), supporting the other partner whilst they build a business, and care of children, and sick or elderly family members.
I’ve broken up with my partner and we can’t agree on how to split our assets. How do I make sure I get a fair deal?
It’s important to understand your rights and obligations in the event of a separation. The Act provides for a 50/50 split on relationship property and any separate property remains that of the original owner. However, things can get complicated once assets have been shared and mingled. Your lawyer will be able to assist you in determining which assets may be considered relationship or separate, and assist in creating an agreement as to how assets will be divided for you both to sign.
What about if I die or my partner dies?
The Act makes provisions for the division of property in the event of death. It’s up to the spouse or partner to decide whether to follow the deceased partner’s will (or if they don’t have a will, under the rules in the Administration Act 1969), or to apply for relationship property to be divided under the Act.
I’m in a relationship/ civil union/ marriage and would like to make sure my assets are protected in case we break up, but we don’t necessarily want to follow the provisions in the Act. What do I need to do?
It’s possible to agree on a different property division than is provided for in the Act, or prevent costly legal and court fees at a later date if you don’t end up in agreement as to how property should be divided. You can do this by entering into an agreement which is a binding agreement in the event of your separation, and will prevent the need to go to court. Although usually referred to as a “pre-nuptial agreement”, it is possible to make the agreement at any stage or time of the relationship or even after a split, providing the requirements are met to ensure that the agreement is fair, valid and not made under duress:
- Each party must have independent legal advice. This means both people in the relationship will need to consult different lawyers.
- The agreement must be in writing and signed by both people in the relationship, with each signature witnessed by a lawyer.
- The lawyer who witnesses a signature must ensure they certify that prior to signing, the lawyer explained the effects and implications of the agreement.
I entered into a pre-nuptial agreement some years ago. However since then, our relationship situation has changed considerably and now we are splitting up. Is the agreement still valid?
The courts do have some power to set aside an agreement if enforcing it would mean a serious injustice to one party.
In summary, if you are in a de facto relationship, civil union or marriage, you will have certain rights to property which are provided for you by law. It’s important to consider what will happen in the event of a breakup, and ensure both parties to the relationship are considered. Your lawyer will be able to explain your rights in consideration of your personal situation, and assist you in creating an agreement where required which will ensure your assets are divided in accordance with your wishes.