If you’re in a relationship and wondering what might happen to your assets if things change, you are not alone.
Relationship property law in New Zealand can seem complex at first glance but understanding the basics can help you make informed decisions and protect your interests.
What is relationship property?
Relationship property refers to the assets and liabilities that are shared when a relationship ends either by separation or death.
The Property (Relationships) Act 1976 (Act) details how the property of couples is to be divided up when they separate or if one of them dies. It applies differently depending on the length of the marriage, civil union, or de facto relationship.[1] The law aims to ensure that the contributions of both partners to the relationship are treated as equal, regardless of who earned more or owned more at the start.
When does the Act apply?
The Act typically applies to marriages, civil unions, and de facto relationships where the spouses or partners have lived together in the marriage, civil union, or de facto relationship for more than three years.
In some cases, relationships of shorter duration may apply. In the case of de facto relationships, this is especially if there is a child involved or significant financial interdependence.[2]
The 50/50 rule
Once a relationship qualifies, the general rule is that relationship property is divided equally. This includes the family home – regardless of who bought it or whose name is on the title – household chattels and furniture, joint bank accounts, superannuation and KiwiSaver contributions made during the relationship. It also applies to vehicles, investments, and other property acquired while together, and debts incurred such as mortgages.
What is not typically shared
Some assets are typically excluded such as property acquired before the relationship, gifts or inheritances received by one partner, and income and investments derived from separate property. However, separate property can become relationship property over time, especially if it is used for a shared purpose.
Can you opt out?
Yes, couples can enter into a contracting out agreement – commonly referred to as a pre-nup agreement – where they agree on how property should be divided if the relationship ends.[3] There are certain requirements that the agreement/pre-nup must meet to ensure it is legally binding, including having both parties receive independent legal advice.[4]
When should you seek legal advice?
It is worth speaking to a lawyer if:
- You are entering a serious relationship and want to protect your assets.
- You are considering a contracting out agreement/pre-nup.
- You are separating and you are unsure of your entitlements.
- You have received an inheritance or significant gift.
Relationship property law in New Zealand is designed to be fair, however every situation is different, and a one-size-fits-all relationship rarely works.
If you are unsure where you stand, it is always wise to get legal advice before making any big decisions.
[1] Property (Relationships) Act 1976 section 1C
[2] Property (Relationships) Act 1976 section 14A
[3] Property (Relationships) Act 1976 section 21
[4] Property (Relationships) act 1976 section 21F
