When a couple decides to separate, their relationship property is divided equally between both partners. Therefore, it is important for those in a relationship to understand what is considered to be relationship property and what they can retain as their own separate property.

What is relationship property?

Relationship property is any assets and liabilities that are acquired after a qualifying relationship begins. Relationship property includes jointly or commonly-owned property, any property that was acquired in contemplation of the relationship, and property that was acquired for the common use or benefit of the relationship.

The family home and the family chattels are central to the relationship, so they are always considered to be relationship property unless a contracting out agreement applies.

The family chattels include:

  • household furniture, appliances, equipment, and ornaments;
  • cars and other vehicles that are used mainly for family purposes; and
  • household pets.

Other types of property that are often considered to be relationship property include:

  • income generated during the relationship (unless it was generated from separate property or not mixed with relationship property);
  • superannuation like KiwiSaver;
  • insurances, including life insurance and property insurance;
  • tax refunds;
  • shares and investments;
  • real estate that is not the family home; and
  • debts (including hire purchase loans, credit cards, bank loans, and overdrafts).

If classified as relationship property, both partners will be entitled to an equal share in the property. Relationship property is divided equally because all types of contributions to a relationship are considered equal in value.

What is separate property?

Separate property is everything that is not relationship property, essentially being the property that is not shared between partners. Separate property is not divided equally between partners.

Separate property typically falls into one of the following categories:

  • property that was acquired by one partner before entering the relationship;
  • property that was acquired out of separate property or from the proceeds of selling separate property;
  • any increase in value or gain from separate property;
  • heirlooms and taonga;
  • inheritances and property received  through succession under a Will;
  • gifts;
  • any property received from a trust; and
  • property acquired during periods of separation or after separation.

Separate property can become relationship property in some circumstances. If separate property becomes relationship property, it will be subject to equal division between the parties.

This can occur when:

  • separate property is mixed or intermingled with relationship property;
  • separate property is shared between partners;
  • the separate property is used to benefit the relationship; or
  • the non-owing partner contributes to the separate property.

If an increase in value of separate property occurs as a result of any of the above circumstances, that increase will become relationship property.

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 of family law specialists who can answer your questions and put you on the right track.