When a party to a relationship passes away, the surviving partner has the option to either divide their relationship property in accordance with the Property (Relationships) Act (Option A) or inherit under the will of the deceased partner, or intestacy laws if there is no Will (Option B) .

How do Option A and Option B work?

If a party, or parties, in a relationship dies, the law will treat them as if they are separated. 

Option A

If a surviving partner chooses Option A the couple’s relationship property will be divided under the Property (Relationships) Act.  

This law requires that all relationship property be divided equally, as a starting point. This will take priority over any other claim against the deceased’s Will in most circumstances, such as claims from children or claims that the deceased broke their promise to provide for someone in their Will.  

All separate property of the deceased will be divided in accordance with the deceased party’s Will or the intestacy laws if they have no Will.

The surviving partner who selects Option A, will no longer be treated as a beneficiary under the deceased’s Will, unless it is clearly stated in the Will that their rights will continue.  If not, the deceased’s Will can be interpreted as if the surviving partner passed away first and any testamentary gifts to that person will be revoked.

Option A is often preferred if the deceased owned most of the couple’s assets and did not make adequate provision for their partner in their Will, or if there are likely to be claims against the deceased’s estate.

Option B

If the surviving partner chooses Option B, there will be no division under the Property (Relationships) Act.  Instead they will inherit what they have been provided under the deceased’s Will. The surviving partner will also retain the assets they already own as their separate property, and any assets jointly owned, through survivorship.

Option B is often preferred if the surviving partner is likely to inherit a larger share of property by survivorship.  An example is where the couple owned a home as joint tenants.  If one of the joint tenants passes away, the other will automatically own the whole of the property that was previously owned jointly. 

How is the selection made?

Regardless of what option is chosen, the surviving partner must select an option within 6 months of probate of the Will being granted.  Once an option is selected, the choice cannot be reversed.

If no option is selected within 6 months, then Option B automatically applies.

Neither option limits the ability of the surviving spouse to make a claim under the Family Proceedings Act (for instance a family protection claim, or a testamentary promises claim).

Read more about the process of making a choice.

How does a contracting out agreement affect the options?

If a contracting out agreement has been made to divide the couple’s relationship property, there may be little or no relationship property to divide. In this situation, Option B may be preferred by the surviving spouse if their entitlement under the Will is greater than what they would receive if the relationship property was to be divided.

In many circumstances, a contracting out agreement will dictate the option that is to be selected if one partner passes away.

How does a separation agreement affect the options?

If a couple is separated when one or both of them dies, it is possible that they already executed a separation and division of property agreement.  In most cases such an agreement will stipulate that the agreement will continue to apply even if one of them, or both of them should die.  In that case, the parties will retain what they are entitled to under that agreement (in effect Option A is pre-selected). 

If no agreement has been executed, or the agreement does not apply in the event of death, the surviving party can still chose between option A or option B, at least until the parties formally divorce (and assuming there is no separation order).

If there has been a formal divorce or there is a separation order in place, any provision made for the survivor under a Will or the intestacy laws will be revoked.  In that case, option A might be the best option.

If there has not been a formal divorce, then Option B may be the best option available to the surviving partner (for instance if the majority of the estate is left to the surviving partner in the deceased party’s Will). 

Gifts in a Will to a former de facto partner (i.e. where the parties are not married or in a civil union, but they have been in a qualifying relationship for more than 3 years), are not revoked on separation.  If there is no Will, any entitlements under the laws of intestacy will be revoked. 

If both parties pass away, then it is possible for the parties to be represented by their estates (for instance their executors or administrators). 

If separation proceedings have been commenced before one of the partners passes away, or one passes away and the surviving partner plans to start Court proceedings to divide relationship property, they may enter into an agreement with the executor or administrator of the deceased’s estate (Deed of Family Arrangement).

If you have concerns about how your relationship property will be divided upon your or your partner’s death, or if you have questions about how a contracting out agreement or separation agreement may affect this, it pays to speak to an experienced professional who can give you advice specific to your circumstances.

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.

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.