In New Zealand, relationship property is usually split evenly between the ex-partners of the relationship. 

Separate property is retained by one or other partner.

However the usual situation can be altered by particular circumstances. 

Relationship property

Property will generally be classified as relationship property if it is acquired during the relationship, or acquired before the relationship but is used to contribute to the relationship. For example, a family home that a couple lived in during the relationship will almost always be relationship property.

Separate property

Property is usually classified as separate if it is acquired outside of the relationship, or if it is not used to contribute to the relationship. 

An example of this is a bank account that was set up prior to the relationship and was never used to purchase anything during the relationship. This would remain separate property and any ex-partner making a claim would not be entitled to a share in it. 

Inheritance (until it is used), and personal jewellery such as engagement rings are also common examples of separate property.

Intermingling

The category into which property falls is not always easy to define. Separate property can turn into relationship property through intermingling. If separate property intermingles with relationship property, it can transform into relationship property to which your ex-partner is entitled. An example of this is a transfer of money received as an inheritance into a joint bank account that is used to pay off the mortgage of the family home.

Separate property as a portion of relationship property

It can also be possible that different portions of the same property can be classified differently. 

This is the case where an asset is acquired prior to the relationship, but one party continues to contribute to its development throughout the course of the relationship. An example of this is a KiwiSaver account. 

If somebody had a superannuation account with $30,000 in it at the start of the relationship, and contributed $35,000 more to it during the relationship, the spouse or de facto partner would be entitled to a half share of the $35,000. 

A recent Family Court case highlights how relationship property disputes can be dealt with by the court system. 

A young couple who owned a house together separated after being married for 9 years. 

Upon separation, a dispute arose about a savings account and term deposit. One party argued that the accounts were separate property, and the other party argued that separate property and relationship property had intermingled and had transformed what would have been separate property into relationship property.

The accounts in question contained over $1,000,000 of one party’s inheritance. The Court decided that because the account were joint, and the funds were used towards relationship assets, the money in the accounts was relationship property and the spouse therefore had claim to an interest in it.

The Court however also decided that because one party had contributed significantly more assets to the relationship than the other, that party should be given 70% of the joint accounts balance. There is not automatic guarantee that the Court will apply a strict equal division of certain assets.

The division of relationship property can be a confusing and stressful process at an already difficult time. If there are questions around what qualifies as relationship property, or how to divide relationship assets, it pays to seek advice from a professional with experience in the area.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are.  At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.

Shaun Cousins and Matthew Binnie

 

Please note that Rainey Collins is not contracted to provide Legal Aid, other than in the Treaty of Waitangi area.  We therefore are unable to take on any Civil or Family Legal Aid work. If you require Legal Aid in those areas, you can search the list of Legal Aid lawyers on the Ministry of Justice website.