One in four marriages in New Zealand end in divorce.
The Property (Relationships) Amendment Act 2001 renames and amends the 1976 Matrimonial Property Act.
Changes to the Act apply to married couples, partners in existing de facto relationships and partners who in the future enter into de facto relationships.
The aim of the new Act is to reform the law relating to the property of married couples and of couples who live together in de facto relationships. The Act recognises the equal contribution of partners to a relationship and provides for a fair division of relationship property between the partners when their relationship ends by separation or death, while taking account of the partners' children's interests.
The Act extends relationships to include de facto relationships defined as two people, (i.e. a man and a woman, a man and a man, or a woman and a woman) living together in a relationship in the nature of marriage although not married to each other.
Property jointly owned by couples living together for three years or more will generally include the house they live in, furniture, and cars divided on a 50/50 basis, regardless of who paid for those assets.
Other assets will be divided according to contributions to the relationship.
Contributions include financial and non-financial contributions.
A relationship of short duration is when a couple has lived together for less than three years. Equal sharing of the family home and chattels may be set aside. The Court will have discretion to divide property on the basis of contribution, but only if:
.If a Court decides it should make Orders for the division of property from a short-term de facto relationship, the division shall be determined by reference to the contribution from each person in the partnership rather than to any particular asset in question.
The duration of a marriage will include any immediate prior de facto relationship. Therefore, a two-year de facto relationship followed by a two-year marriage will not be a relationship of short duration.
The Act will provide greater powers to award compensation to a spouse affected by property which has been diverted into trusts or companies.
The Act gives the Court power to make Orders that one partner to the relationship has occupation of the home or flat, and use of the furniture, and the Court will be able to make Orders that certain property cannot be sold.
The Act gives the Court power to postpone vesting of property if there is undue hardship to children.
If one partner dies, the Court may order the same share of property (to which the other partner would have been entitled had the relationship ended by separation) to be awarded to the surviving partner regardless of what the instructions are in the deceased partner’s Will.
De-facto property sharing will apply only to those over aged 20.
The courts can order payment to redress economic disparities (Section 15), in which case a partner can be awarded more than 50%.
You may 'contract out' of the above rules. If you or any members of your family are intending to, or do currently, live in a de facto relationship we strongly recommend that consideration be given to the protection of assets by entering into a Contract. It is our view that the formation of Trusts linked with Matrimonial and De Facto Property Agreements, which 'contract out' with regard to the assets placed in those Trusts, will provide protection for the assets covered.
We urge you to seek professional legal advice if you believe you could be affected by the Porperty Relationships Act.
A pre-nuptial agreement needs to be signed by both parties. An agreement must be certified and witnessed by separate lawyers for each party for it to be binding. Each lawyer must explain to a party the full implications and effect of the agreement. A court has power to set aside an agreement if it is unfair under Section 21 J (1).
If your assets are protected by a family trust you do not have to through the emotional path of contracting out.
Some common misconceptions are:
Q. "I have only lived with my partner for two years and the Act only applies to those who have lived with their partners for three years from 1 February 2001".
A. This is incorrect in looking at whether a relationship has met the three year threshold, periods before 1 February 2001 can be counted. For married couples who were in a de facto relationship before they married, the period of their de facto relationship is treated as if it were part of the marriage. Even if you do not meet the three year threshold the Act may still apply if you have a child with your partner, or if your partner has made a "substantial contribution" to the de facto relationship.
Q. We have been in a relationship for four years, but we do not live together. The Act does not apply to us.
A. The Act may still apply to you. The Act sets out a large number of factors for the courts to make their decision on. Even if you do not physically live with your partner, you may still be caught by the Act.
Q. I have lived with my partner for five years - we're not married. Both of us have previously been married to other partners and we each have children from our first marriages. When I die my Will leaves everything to my children and that's how I want it.
A. Under the new Act your partner has the right to claim against your estate. Your partner will also be able to claim under the Family Protection Act 1955. Additionally, if you are supporting any of your partner’s children, those children may also claim under the Family Protection Act.
Q. I lived with my partner for two years and we have been married for one year. I am about to inherit $200,000. This is my money and if we separate it will not be counted as relationship property.
A. The Act requires "relationship property" to be divided equally when a relationship breaks down. Inherited property is usually treated as separate property and is not included in the relationship property, but if you mix it with relationship property part, or all of, the inheritance can become relationship property.