When a relationship ends, either by death of one party or by separation, one of the biggest questions people face is: who gets what?
The Property (Relationships) Act 1976 (Act) details how property is divided when a qualifying relationship ends. At the heart of this is the distinction between relationship property and separate property.
What is relationship property?
Section 8 of the Act details what relationship property consists of. It includes:[1]
- The family home, whenever acquired, and regardless of who’s name is on the title.
- All of the household chattels whenever acquired.
- Joint bank accounts.
- All income earned during the relationship.
- KiwiSaver or superannuation contributions made during the relationship.
- Cars, boats, or other significant assets acquired during the relationship.
Read more about relationship property in our related article.
What is separate property?
Separate property is property that remains the exclusive property of one partner. It is not divided under the usual relationship property rules unless it has been mixed with relationship property or used for joint purposes. It can include:[2]
- Property owned before the relationship began.
- Gifts or inheritance received by one partner during the relationship.
- Any increase in the value of separate property, and any income or gains derived from separate property.
When does separate property become relationship property?
Separate property can lose its protected status if, for example, any increase in the value is attributable (wholly or in part) to the application of relationship property, the actions of the other spouse or partner, or if it is used for the acquisition of, or to increase the value of, any relationship property.
For example, if you own a house before the relationship starts, but you live in it together during the relationship, it is likely it will now be relationship property, regardless of whether the title is in your sole name.
Likewise, if you receive an inheritance and apply it to the family home, that contribution will likely now form part of the shared pool of assets.
Can you keep property separate
Yes, you can opt out of the Act via a contracting out agreement – sometimes referred to as a pre-nup. This legally binding document allows couples to determine how property will be divided if the relationship ends.
[1] Property (Relationships) Act 1976 section 8
[2] Property (Relationships) Act 1976 section 9
