When it comes to division of property between a separated couple, the general rule in New Zealand is that if you were in a ‘qualifying relationship’ for three years or more all of your ‘relationship property’ is to be divided equally.

A ‘qualifying relationship’ includes a marriage, civil union or de facto relationship.  It is possible to be in a de facto relationship while living at separate addresses.  Sharing a common residence is only one factor that is taken into account when determining whether a couple were in a de facto relationship.

‘Relationship property’ includes the family home (the principal place of residence for the couple) and all family chattels (furniture, appliances, vehicles, boats, household tools, and even pets).  The family home and family chattels will be relationship property regardless of when they were purchased.  For example, if the family home was owned by one party prior to the relationship beginning, once they have been together for three years it becomes relationship property.  The fact that it was owned by one party prior to the relationship does not matter.  There are some exceptions to this general rule, but that is the starting point.

Other assets that will be relationship property usually need to be attributable to the relationship.  They typically include Kiwisaver or superannuation contributions made during a relationship, savings accumulated during a relationship (income is usually relationship property), any jointly acquired assets, property acquired for the common use or common benefit of the relationship.  A business or an increase in value of a business could also be relationship property.  It is also possible to be compensated for relationship property which has been transferred to another person, or to a trust.    

Equal division can also apply to debts in some circumstances, such as credit cards, tax liabilities, hire purchase agreements or personal loans.  Even if a debt is in one party’s name it could still be a relationship debt and therefore one that needs to be accounted for between the couple.

‘Separate property’ usually refers to property you acquired before entering into the relationship, which has been kept separate; or gifts and inheritances you acquired during the relationship. Separate property is not subject to the same rules of division and remains the sole property of its owner even after separation.  It is important to note that separate property can become relationship property if intermingled with relationship property. 

So what if you do not want these general rules to apply to you?  It is possible to ‘contract out’ of the general rules by entering into a formal agreement (commonly referred to as a ‘Contracting Out Agreement’ or ‘pre-nup’).  An agreement of this nature can be entered into at any stage of a relationship – at the very beginning, before the three year period or at any stage during the relationship.  If you are considering entering into this type of agreement it is advisable to do so before the three year period (if possible).

For any such agreement to be binding, each party must receive independent legal advice.  This means that each party must see a different lawyer from separate law firms. The agreement must be in writing, signed by both parties, witnessed by their independent lawyers and that same lawyer must certify that they have advised that person as to the effects and implications of the agreement.  The certification process is not a rubber stamping exercise and the lawyer is likely to require detailed information about the couple’s assets and liabilities in order to advise them fully.

The same requirements apply to an agreement between a couple who have separated and want to record the agreed division of their property.