Why Would You Need Relationship Property Advice?

The Property (Relationships) Act 1976 (“Act”) sets out the principles for dividing property on the separation of a relationship or death of one of the partners. It defines what property is considered “Relationship Property” meaning it would be shared equally between partners, and what each person’s “Separate Property” is.

Generally, the Act aims to divide property fairly between partners when a relationship ends, considering the interests of any children of the relationship. The Act also covers if a relationship ends due to the death of a spouse or partner.

Relationship Property generally is:

• The home you live in together, even if one partner owns it and bought it prior to the relationship;
• Income earned during the relationship, including kiwisaver;
• The shared property chattels, even if purchased before the relationship;
• All jointly owned property;
• Property acquired in contemplation of the relationship (for example, buying a holiday home in one party name pre-marriage with the intention of using it for the family);
• Superannuation, Kiwisaver (proportion during relationship);
• Rental/investment properties;
• Shares, investments;
• Business interests;
• Trust rights (sometimes).

Each partner’s Separate Property is:

• Inheritance or distributions from third party trusts, provided its kept separate
• Other properties owned prior to the relationship if not for benefit of relationship and not maintained/paid for out of joint Relationship Property (note that income earned during the relationship is Relationship Property)
• Kiwisaver or Superannuation balance prior to the relationship
• Property acquired after separation or the death of one partner

If you are:

• In a de facto relationship of three years or more; or
• Married or in a civil union of three years or more (including the time prior to marriage that you were in a de facto relationship; or
• In a de facto relationship or married and have a child together.

Some de facto relationships shorter than three years will also be caught by the provisions of the Act. The court also looks at a range of factors when determining whether a relationship is considered “de facto” and it doesn’t only come down to whether the parties are living together. If you are unclear as to whether your relationship is or could become “de facto”, please seek our advice on your circumstances.

Partners can make a claim for Relationship Property under the Act up to three years after the separation of a de facto relationship, or 12 months after dissolution of a marriage or civil union.

The Act also recognises contributions to a relationship that aren’t financial and makes provision for compensation in some circumstances. One partner may make more non-financial contributions to the relationship, such as looking after children or running the household. Non-financial contributions are given equal value as financial contributions, and the Act recognises that one person may suffer a long term income reduction due to the responsibilities they carry during the relationship.

As relationships progress, circumstances change and one person may take on more of the responsibilities at home than the other. The Act accounts for this “division of functions” within the relationship

You can agree to other arrangements other than what is set out under the Act in the form of a Contracting Out Agreement (“Agreement”). However, there are specific requirements as to what you can agree to, and each of you must receive independent legal advice as to the effect of the agreement. This means that for the agreement to be valid and enforceable, each partner must be informed by an independent lawyer of what they are agreeing to, and what they would otherwise be entitled to under the Act.

An Agreement gives both parties certainty as to what they consider would be fair in the event they separated or if one partner died. It is particularly important to make sure that your wills tie in with the Agreement – even more so in the case of blended families to avoid issues between the surviving partner and the children of the deceased.

We recommend you seek advice sooner rather than later. As time passes and the relationships progresses, it can be more difficult to put the protection and certainty in place that you need. After a discussion regarding your circumstances, we can advise you on your potential risks, and what we recommend you do about them. We can also let you know what circumstances may trigger liability for you under the Act, so that you are fully aware and informed.

Discussing relationship property with your partner can be a tough conversation to have. We recommend that these conversations take place on a “sunny day” when the partners can reasonably discuss and come to agreement, well before any “storms” or issues arise. An event such as moving in together, buying property or a joint asset, receiving funds (from a trust, estate or family member), is the perfect time to record intentions in writing. Each partner can have peace of mind and certainty knowing that they have received advice specific to their circumstances.

We provide advice on all Relationship Property matters, including safeguarding your assets, preparation of agreements, and independent advice on agreements prepared by other lawyers. 

Contact our Trust & Asset Protection Team for practical advice on your relationship property matters.