Couples going through a separation or divorce will need to properly divide their relationship property to avoid legal and financial complications down the line. Separating couples who were married, in a civil union partnership or in a de facto relationship will be affected by the Property (Relationships) Act 1976 (the PRA) when dividing relationship property.
The application of the PRA depends on what type of relationship you and your former partner had and how long you were together. Relationships who meet the following conditions will automatically be affected by the PRA:
- Married, civil union and de facto couples who have been together for at least three years.
- Short-term marriages and civil unions. Even married and civil union couples who have been together for less than three years will be covered by the PRA. However, in some cases relationship property may be divided according to each person’s contributions to the relationship rather than being divided equally.
Short-term de facto couples who have been together for less than three years are generally not covered by the PRA. In this case, the ordinary rules of property ownership can be used to determine the entitlements of each person.
Separating couples who meet the above relationship conditions will generally have their shared property divided equally between them. Couples will need to determine what is considered separate property and relationship property. Relationship property can include:
- The family home, even in the case that it was acquired by one partner before the relationship began or by inheritance, a trust, or a gift. The exception of this rule applies if the property is on Māori land.
- Any common or jointly-owned property.
- All income earned and property acquired after the relationship started.
- Property acquired before the relationship began if it was intended for the couple’s common use or benefit.
- Superannuation, insurance payouts and income from joint property that was received during the relationship.
There are three different methods of dividing your property after a relationship breakdown:
- A couple can agree on the division of property between themselves. In this case, the court doesn’t have to be involved, however, if you wish to be able to enforce the agreement through court, the agreement must be in writing and both you and your former partner must have had independent legal advice.
- The Family Court can manage relationship property divisions if you and your partner cannot agree on the division, or if one of you believes the arrangement is unfair. The Family Court can intervene to identify the relationship property, review property valuations, determine an agreed value and decide how it will be divided between a couple.
- Couples may undertake Family Dispute Resolution mediation to manage how they will care for their children. In this case, you can also talk about how you will divide relationship property if it helps you to agree on a plan to care for your children. The agreement should be put in writing and both parties should seek independent legal advice.