If you have recently separated from your spouse, civil union or de facto partner, you should seek advice at an early stage about your entitlements to a relationship property settlement. The breakdown of a relationship brings about many changes and it is important that you understand what steps need to be taken to achieve a property settlement as well as how a final division of property may look in your particular circumstances.
We are experienced in family law relationship property matters and represent clients from all backgrounds. We will ensure that we understand your issues and objectives before offering practical, strategic and timely solutions.
We can assist you to address the following relationship property issues:
- negotiating urgent financial support following separation including spousal maintenance and interim property settlements
- complex relationship property matters involving trusts, companies, cross-border issues or rural properties with farming enterprises
- property settlements involving smaller property pools such as a small business or a single major asset such as a residential property
- obligations in relation to future financial support for a spouse or children including spousal maintenance and child support, and prepare and advise clients on relationship property agreements in relation to these issues
- protection of assets where clients are remarried or entering into a new relationship through contracting out agreements (also known as s21 agreements)
We often work with other professionals such as our clients’ accountants or financial planners to ensure that a property settlement is tailored to meet their individual financial structure and takes into account taxation and asset planning requirements.
When can I start finalising the division of property?
If you are sure your relationship is at an end and there is no prospect of reconciliation with your ex-partner, you can commence the legal process of dividing your property as soon as you separate.
In most cases, parties are able to reach agreement as to division of relationship property without the involvement of the Family Court. The Family Court can help divide your relationship property if you and your ex-partner can’t agree or if the agreement is unfair or breaks down.
It is important to be aware that there are certain time limits that apply should you need to make an application to the Family Court. You need to apply within 1 year of your divorce or within 3 years from the end of your de facto relationship. These rules are specific and only in exceptional circumstances will a court grant leave for an extension of time. Different rules apply to relationships that have lasted for less than three years.
How is a relationship property settlement documented?
You can agree between yourselves how to share your property and the court doesn’t have to be involved. If you want to be able to enforce the agreement through the court, your agreement must be in writing and both of you must have had independent legal advice.
If you have recently separated, we recommend making an appointment with us as soon as possible so we can work towards finalising the division of your property. This usually includes disclosure of relevant financial documents, identifying the extent and value of your relationship property pool, negotiating an agreement or if necessary, attending mediation or family dispute resolution. In most cases we will be able to assist you to resolve your property matter without the intervention of the court, which saves both parties time and money.
If you and your ex-partner have already reached an agreement on how your property should be divided then we can explain how the proposed arrangements will affect you, flag any potential issues and then advise you on the most appropriate way for the agreement to be formalised.
If you are having difficulties reaching an agreement, we can help negotiate a settlement through your ex-partner’s lawyer. If no agreement is reached, or the matter is very complex, going to court may sometimes be the only option. In this event, we try to minimise the issues in dispute to avoid excessive fees.
How division of property is determined
The general rule is that the property being divided under the Property (Relationships) Act is valued at the date of the court hearing. However, the court does have the discretion to set a different date for valuation if it thinks it is appropriate.
If there is any dispute about the value of property or household items, it is important for the parties to get independent valuations.
What constitutes relationship property?
Relationship property covers things of financial value that you gained during the relationship. This can include:
- the family home and contents (but not taonga or heirlooms);
- other land or buildings;
- salary or wages earned during the relationship;
- insurance payouts;
- superannuation you accumulated;
- rents and other income from joint property;
- any property gained when you were in the relationship or had the relationship in mind and intended for both of you to use;
- non-personal debts (your personal debts are your own responsibility);
- gifts or inheritances that have become mixed with relationship property;
- property you both agree is relationship property;
- increases in the value of relationship property, income from it or the proceeds from the sale of it.
The New Zealand relationship property regime has as the starting point a presumption of equal sharing unless the property is separate property or subject to one of the exceptions in the Property (Relationships) Act.
What constitutes separate property?
Separate property is the property of each spouse or partner that is not relationship property. The general rule is that separate property remains the property of the spouse or partner who owns it and does not have to be divided according to relationship property law.
Separate property includes:
- property acquired by either spouse or partner while they are not living together as a couple;
- property acquired out of separate property and any proceeds of sale of separate property;
- increases in value of separate property, and income, interest or dividends earned from separate property;
- property that a spouse or partner acquires from a third person by gift, inheritance, or because the spouse or partner is a beneficiary under a trust settled by a third person (unless this property gets mixed with relationship property).
Note: Gifts given by one spouse or partner to the other are not relationship property unless the gift is used for the benefit of both spouses or partner
There are some exceptions to the presumption of equal sharing which allows relationship property to be divided according to the contributions of the partners to the relationship instead of on a 50/50 equal sharing basis. These include where there are extraordinary circumstances or the relationship lasts for less than three years and there is a child of the relationship or the applicant has made a substantial contribution to the relationship, and the Court is satisfied that it would be unjust not to make an order under the Act.
If property is divided according to the contributions of the partners to the relationship, both financial and non-financial contributions are taken into account including:
- caring for children or elderly relatives
- managing the household so that a partner can concentrate on building a business
- working to increase the value of property
- giving up a higher standard of living
- working outside the home so that a partner can gain qualifications.
If property is not classified as relationship property under the Act the property is separate property. Ownership of separate property stays with the partner who owns it unlike relationship property which is divided equally. Separate property includes things like:
- property bought with the proceeds of sale of property owned by either partner before the relationship began provided the property was not acquired for their common use or benefit;
- family heirlooms or taonga;
- gifts and inherited property which a partner receives during the relationship;
- property bought with inherited property received by one partner during the relationship provided the property was not intermingled with relationship property to the extent that it would be impractical or unreasonable to regard it as separate property.
Relationship property law is complex and discretionary – no two cases are alike, and it is important to obtain independent legal advice tailored to your individual circumstances, from an experienced professional.