When a relationship ends, dividing assets and debts can be a challenging and often emotionally taxing process. In New Zealand, the division of property upon separation is governed by the Property (Relationships) Act 1976, which applies to married couples, civil unions, and qualifying de facto relationships (where a couple lives together for at least three years).
Today, we outline what counts as relationship property in New Zealand, how it is shared, and how the support of a family law specialist can help.
What is Relationship Property?
Relationship property generally consists of the assets and debts accumulated during the relationship, subject to some exceptions. These must be divided between the partners when they separate. The Act covers:
- The Family Home: Regardless of when or how the home was acquired, it is classified as relationship property if used as the family residence and owned personally by one or both spouses/partners.
- Family Chattels: Items such as furniture, appliances, vehicles, and even pets are considered relationship property.
- Jointly Owned Property: Any property owned together by both partners, regardless of individual contributions.
- Retirement Savings: KiwiSaver and superannuation contributions made during the relationship.
- Business Interests and Investments: Any business assets or investments acquired during the relationship, including shares.
- Proceeds from Relationship Property: Money from selling assets that were relationship property.
- Relationship Debts: Any debts incurred for the benefit of the relationship, such as mortgages or loans for family vehicles.
For the family home and chattels, it doesn’t matter if one partner originally owned them before the relationship began; they will still usually be considered relationship property and subject to division.
Unpacking the Equal Sharing Principle
The general rule under the Property (Relationships) Act is that relationship property should be shared equally if the relationship lasted at least three years, however, there are some exceptions to this.
When Equal Sharing Does Not Apply
In some situations, the equal sharing rule may not apply:
- Short Relationships: If the relationship lasted less than three years, property is generally divided based on individual contributions rather than equally.
- Exceptional Circumstances: If equal division would be repugnant to justice, the court may order an unequal split. This is rare and only in extraordinary situations.
- Economic Disparity: If one spouse or partner stops working or gives up a career to care for children and there is a significant difference in incomes upon separation, the court may compensate by adjusting the division.
- Pre-existing Homes: If both partners owned homes before the relationship, the division may reflect this prior ownership.
- Enhanced Value of Separate Property: If one partner’s efforts significantly increased the value of the other’s separate property, the court may consider compensation.
What Is Separate Property?
Separate property typically remains with the original owner and is not subject to division. It includes:
- Assets Owned Before the Relationship: Unless they became the family home or were used jointly.
- Inheritances or Gifts: Even if received during the relationship, unless integrated with relationship property.
- Property Acquired After Separation: Assets obtained after the relationship ended, unless acquired from relationship property.
However, separate property can sometimes become relationship property. For instance, if an inheritance was used to purchase or pay off the family home, it might be treated as relationship property.
Resolving Property Disputes
If partners cannot agree on what counts as relationship property or how it should be divided, the Family Court can step in. The court will:
- Assess how the property was used and who contributed to its value.
- Determine whether the relationship meets the criteria under the Act (especially relevant for de facto couples).
- Consider any exceptions to equal sharing.
- Evaluate the value of property and debts..
- Take into account recent legal developments, particularly how assets held in trusts are treated when one partner has substantial control over the trust.
The Role of a Family Law Specialist
Engaging a relationship property lawyer can make the process significantly smoother and less stressful. These professionals:
- Provide Expert Advice: They can assess your specific situation and help clarify whether your assets and debts fall under relationship property or separate property.
- Guide You Through Legal Requirements: Specialists ensure all necessary documents and legal steps are correctly followed, reducing the risk of delays or disputes.
- Negotiate on Your Behalf: In situations where amicable agreement seems challenging, a lawyer can mediate discussions and propose fair settlements.
- Represent You in Court: If the matter proceeds to the Family Court, having a knowledgeable advocate can improve your chances of a favourable outcome.
Need Expert Advice? Talk to Sharon Chandra
Handling the division of relationship property can be time-consuming and complex, especially when significant assets or debts are involved. While the principle of equal sharing applies in most cases, understanding the exceptions is crucial. Seeking independent legal advice is highly recommended to protect your rights and ensure you have the best chance of receiving a fair division of property.
If you are going through a separation or divorce and are unsure about your entitlements or obligations, consulting a family law expert can provide clarity and guidance for your unique circumstances. Sharon Chandra is an experienced family law specialist with years of experience helping New Zealanders manage relationship property. Get in touch today for professional assistance.