The law surrounding property owned by couples and its division when they separate is governed by the Property (Relationships) Act 1976.
The Act provides options for how parties can divide their property by agreement before, during and after their relationship ends. At Gina Jansen Lawyers, we provide advice regarding relationship property division so we put together some helpful FAQ’s.
What relationships does the Property (Relationships) Act apply to?
The PRA applies to married/civil union couples, and de facto couples in a relationship for at least 3 years. The Act also applies to couples in a de facto relationship for less than 3 years, who have children, and not making an order would cause serious injustice and to couples in a de facto relationship for less than 3 years where one partner makes substantial contributions to the relationship and not making an order would cause serious injustice. In these instances, shares are divided in accordance with contributions to the relationship.
What is Relationship & Separate Property?
Under the Act, property can be classified as either relationship property or separate property. Property classified as relationship property is divided equally i.e. 50/50. For example, the family home and family chattels are always relationship property no matter whose name they are in or how they were acquired. Other assets may also be classified as relationship property depending on the circumstances in which the asset was bought, used, created or otherwise mixed up with other relationship property and can include: income earned during the relationship, property bought by either partner during the relationship, the value of life insurance, KiwiSaver and superannuation paid for during the relationship, property bought with the proceeds of separate property for common use/benefit, and gifts or inheritances that have been intermingled with relationship property. For example, inheritances paid into joint bank accounts. If it’s not classified as relationship property, then the property is separate property. Ownership of separate property stays with the partner who owns it. Separate property includes: property bought with the proceeds of sale of property owned by either partner before the relationship began and not required for common use or benefit, family heirlooms or taonga, gifts and inherited property which a partner receives during the relationship.
What Does ‘Contributions to the Relationship’ Mean?
The Court may decide that relationship property is to be divided according to the contributions of the partners instead of on a 50/50 equal sharing basis. If property is divided according to the contributions of the partners to the relationship, both financial and non-financial contributions can be taken into account, such as: caring for children or elderly relatives, managing the household so that one partner can build a business, and working outside the home so that a partner can gain qualifications.
We Have Separated. What Now?
Fortunately, the vast majority of couples are able to reach agreement on how their property will be divided. Written agreements should be undertaken by a relationship property lawyer to ensure it is binding and enforceable, as the law requires that each partner must receive independent legal advice with each lawyer certifying the agreement on behalf of the partner, he/she represents. Where a couple can’t agree about how property should be divided, then it’s important to get advice from a relationship property lawyer. That may not sound like good news but a good relationship property lawyer will ensure that you receive sound, realistic advice, and will help you to correctly identify and classify what is relationship property and each party’s contributions to it, along with helping to find and reach solutions by agreement and without the intervention of the Courts.
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