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Relationship Property Basics

It is well known that at least a third of marriages and de facto relationships fail. Being aware of the financial consequences of the end of a relationship means you can put in place strategies to protect the property you acquired before the relationship and protect your rights to a share of property acquired during the relationship.

Under current law, there is a general rule, with few exceptions, that if a couple are deemed to be living together for at least three years, there is an equal division of relationship property if the relationship ends. Relationship property includes the family home, even if the family home was acquired before the start of the relationship, as well as other family chattels such as boats and cars or even pets. Yes, the gossip columns are right when it comes down to squabbles over property.

Relationship property can also include superannuation accumulated since the start of the relationship. That is why KiwiSaver Scheme providers are seeing property relationship claims. This has also brought additional business for actuarial firms to verify amounts being claimed in such circumstances.

Separate property, which remains the property of the individual, includes businesses or investments acquired prior to the relationship, gifts and inheritances held separately. Even with these, it is most important not to inter-mingle them with relationship property.

We have seen instances where family trusts have fallen victim to relationship property claims. This was because the trust finances were being intermingled with relationship finances. Simple trust mismanagement in these situations nullified the main reason as to why the trusts were established in the first place.

Relationships sometimes end through a death. The surviving partner can choose between the provisions of the will or a relationship property claim. This is particularly important to note when it comes to second relationships. A surviving partner may be entitled to half the value of relationship property which could be significantly more than what was provided for under the will.

Trusts and ‘contracting out agreements’ are often put in place at the start of a relationship to establish a fair means of dividing property on separation or death. Suggesting you do this at the start of a relationship with a potential life partner can be emotionally difficult to deal with. The chances are your potential partner may also be having similar thoughts.

Sound independent legal advice is required, particularly if you have significant personal assets or if you are in a second relationship. It is very important to review these arrangements during a relationship as, while they might be fair at the start, they may become unfair as the relationship matures.


Steven Barton (FSP 32663) and Susan Pascoe Barton (FSP 32382) are Certified Financial Planners and Authorised Financial Advisers.  Their initial disclosure statements are available free of charge by contacting them on (07) 3060080 or they can be downloaded from www.pascoebarton.co.nz. This column is general in nature and should not be regarded as personalised investment advice.