14 Oct 7 Fundamentals of Relationship Property You Need To Know
Relationships are inevitably an adventure, and no one can ever say how they will turn out. People change as they grow older, life circumstances change, dreams and desires alter. And a relationship that might at first have seemed to be in for the long haul, may not turn out the way you expected.
You might be married, or maybe you have elected to live with someone in a more ‘carefree’ relationship. Perhaps you prefer to maintain separate residences.
That does not automatically guarantee that “what’s yours is yours” if your relationship should fail …
The Property (Relationships) Act and You
If you are married, in a de facto relationship, or in a civil union partnership, and your relationship ends by separation or one of you dies, you will be affected by the Property (Relationships) Act.
In the case of de facto relationships, the Act applies to:
- de facto relationships of at least three years,
- de facto relationships of less than three years where the couple has a child,
- de facto relationships of less than three years were significant contributions to the relationship have been made by one partner .
The latter would result in serious injustice, and so the relationship is also covered by the Act.
Both parties are equal in the eyes of the law
The Property (Relationships) Act is based on the following principles:
- The two people in a relationship are equal,
- Both financial and non-financial contributions to the relationship are treated equally, and
- Any economic advantages or disadvantages that one party may have had as a result of the relationship, be taken into account when dividing up the property.
What is relationship property?
Relationship Property is the property that gets divided when a relationship ends. It includes things such as:
- The family home and chattels, such as the furniture and the family car
- Any property obtained by either party before the relationship but intended for common use
- Property owned jointly
- Property obtained by either party during the relationship. This excludes gifts and inheritances unless the owner allowed these to become part of the relationship property. An example would be inheritance money used to buy the family car.
- Income earned during the relationship
- Joint debts, superannuation or life insurance acquired during the relationship
- Any increase in the value of relationship property or income from it or money obtained from its sale
Knowing the nature, status and value of assets and liabilities is, therefore, fundamental to the division of relationship property.
Is there a property that is separate from relationship property?
Yes, a property that is kept separate from the relationship, and which is usually not shared at the breakup but remains with the person who owns it, is known as ‘separate property’. However, if you want to protect any separate property, you need to make the appropriate legal arrangement to ensure it remains separate from any relationship property. Often, over time, separate property can become intermingled with relationship property or be used for purposes in the relationship, in which case it could be deemed relationship property at the time of any breakup.
Children affect the division of relationship property
Under the Property (Relationships) Act, the court must by law consider the interests of any dependent children. It may allocate relationship property to help the children. For example, the court may allow the children’s main caregiver to keep the family home and/or delay the division of relationship property. This would be to prevent unfair difficulty for the main caregiver and the children.
‘Contracting out’ of the Property (Relationships) Act
A couple can make their own agreement about how to manage their property during their relationship and how to divide it if the relationship breaks up. This is known as ‘contracting out’ of the Act – also called a prenuptial agreement or ‘prenup’. However, a court can still override this agreement if it felt it was unfair to one of the partners.
When you draw up a contracting out agreement, you must ensure it is in writing and is signed by both parties. Both parties must also have obtained independent legal advice before they sign. Their signatures must be witnessed by their lawyers, who certify that they have explained the implications of the agreement to their clients. If this is not done, the agreement may not be legally enforceable.
Sound legal advice is crucial
There is no substitute for getting sound legal advice from an experienced family lawyer. Never rely on advice from well-meaning friends or the internet. Talk to your experienced family law specialist at Quay Law to ensure you get the best solution for your relationship property matters.Talk To Your Lawyer in Auckland Now