Following separation one of the main issues is the division of relationship property.  In New Zealand, under the Property (Relationships) Act 1976,  the general rule is that once you have been in a qualifying relationship** for three years or more, in the event of separation all relationship property should be divided equally.  So, what is relationship property?

Relationship property includes the family home (the main residence of the couple) and all family chattels, whenever acquired.  Family chattels include furniture, appliances, household tools, pets, as well as motor vehicles, boats, caravans and trailers used for family purposes.  “Whenever acquired” means it does not matter whether you owned the family home/family chattels prior to the relationship nor does it matter whether one partner contributed more than the other to these assets, they will be relationship property regardless and therefore available for equal division between partners.

Other relationship property can include:

  • All jointly owned property;
  • Property acquired in contemplation of the relationship (for example, buying a holiday home in one parties name pre-marriage with the intention of using it for the family);
  • Superannuation, Kiwisaver policies (the proportion that is relevant to the relationship period);
  • Rental/investment properties;
  • Shares, investments;
  • Business interests;
  • In some circumstances, rights in respect of a Trust;
  • Relationship debt (which does not necessarily have to be in joint names).

Some assets or debts may also be classified as “separate property” rather than relationship property – separate property remains the property of the owner and is not up for division.  There are also exceptions to the equal division rule which can see relationship property divided unequally in some circumstances (see for example Economic Disparity in a Relationship Property Context). 

The first step in the property division process is the disclosure process; essentially an information gathering exercise to work out what assets and debts each partner owns or has an interest in.  Each asset/debt can then be classified as either relationship property or separate property.  Relationship property assets/debts will then need to be valued in order to determine the total value of the relationship property pool.  Following that, agreements can be reached regarding the division of relationship property.

In order for any agreement regarding the division of relationship property to be binding, each partner must obtain independent legal advice and their agreement must be recorded in writing and signed with their independent lawyers.

For those who want to protect their assets from division following from a relationship breakdown, a relationship property agreement can be entered into to contract out of the law that applies to property division between couples.  Any such agreement must also be in writing with each partner obtaining independent legal advice and signing the agreement with their lawyers.

If you would like further information or advice, please contact Debbie Dunbar, email debbie.dunbar@morrisonkent.com.

** A qualifying relationship is a marriage, civil union or de facto relationship of three years or more.  In some circumstances, the Property (Relationships) Act can apply to relationships of less than three years although the equal division rule does not then ordinarily apply.

Read more articles on relationship property:
Gifts from Parents in the Case of Separation
Separation and Property Division