Your Law - New Zealand Relationship Property

FAQs (Frequently asked questions)

FAQs (Frequently asked questions)

1. A summary of the Property (Relationships) Act 1976
2. The aim of the Act
3. The principles behind the Act
4. The Changes introduced by the Property (Relationships) Amendment Act 2001 and other Acts
5. What is a "de facto relationship"?
6. Relationship property
7. Amendments to address economic disparities
8. Relationships of short duration
9. Contracting out of the Act
10. Trusts
11. Administration Act 1969
12. Family Protection Act 1953
13. Can I make a draft Relationship Property Deed myself?

 

1. A summary of the Property (Relationships) Act 1976

We set out for your benefit the following summary of the law.

This summary is not a substitute for detailed legal advice as to your particular circumstances, and how the law has been interpreted by the Courts.

The Property (Relationships) Act 1976 commenced on 1 February 2002. The Act applies to marriages and de facto relationships whenever they began but does not apply to de facto relationships that ended before the legislation came into effect on 1 February 2002

2.The aim of the Act

The aim of the Act As detailed in section 1C of the Act:

(1) This Act is mainly about how the property of married couples and couples who have lived in a de facto relationship is to be divided up when they separate or 1 of them dies.
(2) This Act applies differently depending on the length of the marriage between the husband and wife or the de facto relationship between the de facto partners:
(a) in the case of marriages, special rules apply to marriages of less than 3 years:
(b) in the case of de facto relationships, this Act usually applies only when the de facto partners have lived together for at least 3 years, but it may apply to shorter de facto relationships in certain circumstances.

4C Application to existing and future de facto relationships
(1) This Act applies to�
(a) de facto relationships that began before 1 February 2002; and
(b) de facto relationships that begin on or after 1 February 2002.
(2) This Act does not apply to de facto relationships that ended before 1 February 2002.
(3) In general, the couple's property is to be divided equally between the couple.

The aim of the Act is expressed to be:

* to extend the provisions of the Matrimonial Property Act 1976 (renamed as the Property (Relationships) Act 1976 (the Act) to de facto partners including same sex partners, who have lived together for at least three years;
* address the issue of economic disadvantage suffered by a non-career partner when a relationship ends;
* provide that all relationship property is to be divided equally between the partners unless there are extraordinary circumstances which would make it unjust to require it;
* to address problems of economic disadvantage suffered by non-career spouses when a marriage breaks up;
* to extend those provisions to apply to de facto partners (including same sex partners) who have lived in a de facto relationship for at least three years (or for a shorter period in certain circumstances);
* The provisions of the Administration Act 1969 entitle any partner including a de facto partner (including a same sex partner) to a share in the estate where the partners have lived together for 3 years;
* The provisions of the Family Proceedings Act 1980 relating to spousal maintenance cover all partners including de facto partners (including a same sex partner)
* The provisions of the Family Protection Act 1955 give all partners including de facto partners (including same-sex partners) who have lived in a de facto relationship for at least three years (or for a shorter period in certain circumstances) the right to make a claim against the estate of a deceased partner.

 

3.The principles behind the Act

The principles to be borne in mind when applying the Act are expressed in section 1N as follows:

The following principles are to guide the achievement of the purpose of this Act:
(a) the principle that men and women have equal status, and their equality should be maintained and enhanced:
(b) the principle that all forms of contribution to the marriage partnership, or the de facto relationship partnership, are treated as equal:
(c) the principle that a just division of relationship property has regard to the economic advantages or disadvantages to the spouses or de facto partners arising from their marriage or de facto relationship or from the ending of their marriage or de facto relationship:
(d) the principle that questions arising under this Act about relationship property should be resolved as inexpensively, simply, and speedily as is consistent with justice.

 

4.The Changes introduced by the Property (Relationships) Amendment Act 2001 and other Acts

The Act (and other amending legislation passed on 29 March 2001) provides as follows:

* Rights after death The Act in part 8 creates a new set of rights and discretionary Court powers where one of the spouses has died. Spouses are given the election of taking property under the provisions of the partner's will or choosing to utilise part 8 provisions.
* The Family Court (the Court) is given sole originating jurisdiction under the Act.
* Deferment of sharing Assistance is given to custodial parents by giving the Court greater powers to postpone the sharing of property where there are minor dependent children if this is necessary to avoid undue hardship for the custodial parent.
* Post separation contributions The Court is expressly empowered to compensate spouses who maintain relationship property following the end of a relationship and, to penalise those who allow relationship property to decrease in value.

5.What is a "de facto relationship"?

The term "de facto relationship" is defined as a follows:

2C Meaning of de facto partner
For the purposes of this Act, a person is another person's de facto partner if they have a de facto relationship with each other.

 

2D Meaning of de facto relationship
(1) For the purposes of this Act, a de facto relationship is a relationship between 2 persons (whether a man and a woman, or a man and a man, or a woman and a woman):
(a) who are both aged 18 years or older; and
(b) who live together as a couple; and
(c) who are not married to one another.
(2) In determining whether 2 persons live together as a couple, all the circumstances of the relationship are to be taken into account, including any of the following matters that are relevant in a particular case:
(a) the duration of the relationship:
(b) the nature and extent of common residence:
(c) whether or not a sexual relationship exists:
(d) the degree of financial dependence or interdependence, and any arrangements for financial support, between the parties:
(e) the ownership, use, and acquisition of property:
(f) the degree of mutual commitment to a shared life:
(g) the care and support of children:
(h) the performance of household duties:
(i) the reputation and public aspects of the relationship.
(3) In determining whether 2 persons live together as a couple,:
(a) No finding in respect of any of the matters stated in subsection (2), or in respect of any combination of them, is to be regarded as necessary; and
(b) a Court is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate to the Court in the circumstances of the case.
(4) For the purposes of this Act, a de facto relationship ends if:
(a) the de facto partners cease to live together as a couple; or
(b) 1 of the de facto partners dies.

6. Relationship property

The term "relationship property" means:

8 Relationship property defined
(1) Relationship property shall consist of�
(a) the family home whenever acquired; and
(b) the family chattels whenever acquired; and
(c) all property owned jointly or in common in equal shares by the husband and the wife or by the de facto partners; and
(d) all property owned by either spouse or de facto partner immediately before their marriage or de facto relationship began, if�

(i) the property was acquired in contemplation of the marriage or de facto relationship; and
(ii) the property was intended for the common use or common benefit of both spouses or de facto partners; and

(e) subject to sections 9(2) to (6), 9A, and 10, all property acquired by either spouse or de facto partner after their marriage or de facto relationship began; and
(ee) subject to sections 9(3) to (6), 9A, and 10, all property acquired, after the marriage or de facto relationship began, for the common use or common benefit of both spouses or de facto partners, if�

(i) the property was acquired out of property owned by either spouse or de facto partner or by both of them before the marriage or de facto relationship began; or
(ii) the property was acquired out of the proceeds of any disposition of any property owned by either spouse or de facto partner or by both of them before the marriage or de facto relationship began; and

(f) Repealed.
(g) the proportion of the value of any life Insurance policy (as defined in section 2), or of the proceeds of such a policy, that is attributable to the marriage or de facto relationship; and
(h) any policy of Insurance in respect of any property described in paragraphs (a) to (ee); and
(i) the proportion of the value of any superannuation scheme entitlements (as defined in section 2) that is attributable to the marriage or de facto relationship; and
(j) all other property that is relationship property under an agreement made under Part 6; and
(k) any other property that is relationship property by virtue of any other provision of this Act or by virtue of any other Act; and
(l) any income and gains derived from, the proceeds of any disposition of, and any increase in the value of, any property described in paragraphs (a) to (k).

Under section 11 of the Act on the division of relationship property each of the partners is entitled to share equally in the family home, the family chattels (but not family heirlooms), and any other relationship property after 3 years of marriage or de facto relationship. However, under section 13 of the Act if there are extraordinary circumstances that make equal sharing of the relationship property "repugnant to justice", the share of each partner in that property is to be determined in accordance with each partner's contribution to the partnership relationship.

7. Amendments to address economic disparities

The Act gives the Court a discretion to order one partner to pay a sum of money to the other partner out of the first partner's relationship property, if the Court is satisfied that, after the partnership relationship ends, the income and living standards of the other partner are likely to be significantly higher than those of the other partner because of the effects of the division of functions within the relationship while the partners were living together.

8. Relationships of short duration

The term "relationship of short duration" means either a marriage or a de facto relationship where the partners have lived together for less than three years and includes both where the marriage immediately follows the de facto relationship. For the purposes of the Act, if a marriage was immediately preceded by a de facto relationship between the husband and the wife, the de facto relationship must be treated as if it were part of the marriage.

Meaning of relationship of short duration:

(1) In this Act, relationship of short duration means:
(a) in relation to a marriage, a marriage in which the husband and wife have lived together as husband and wife�
(i) for a period of less than 3 years; or
(ii) for a period of 3 years or longer, if the Court, having regard to all the circumstances of the marriage, considers it just to treat the marriage as a relationship of short duration:
(b) in relation to a de facto relationship, a de facto relationship in which the de facto partners have lived together as de facto partners�
(i) for a period of less than 3 years; or
(ii) for a period of 3 years or longer, if the Court, having regard to all the circumstances of the de facto relationship, considers it just to treat the de facto relationship as a relationship of short duration.
(2) For the purposes of paragraphs (a)(i) and (b)(i) of subsection (1), in computing the period for which the parties have lived together as husband and wife or as de facto partners, the Court may exclude a period of resumed cohabitation that has the motive of reconciliation and is no longer than 3 months.

Property where a relationship of short duration is a de facto relationship
The Act provides that an order cannot be made under the Act for the division of relationship property if a de facto relationship is a relationship of short duration. There is an exception to this rule where the Court is satisfied that there is a child of the relationship, or that the applicant has made a substantial contribution to the partnership relationship, and (in either case) that failure to make an order under the Act would result in serious injustice. Then the Court may award each partner a share of the relationship property, based on the contribution of each partner to the partnership relationship.

9. Contracting out of the Act

Section 21

Spouses or de facto partners may contract out of this Act
(1) A husband and wife or de facto partners, or any 2 persons in contemplation of entering into a marriage or de facto relationship, may, for the purpose of contracting out of the provisions of this Act, make any agreement they think fit with respect to the status, ownership, and division of their property (including future property).
(2) An agreement made under this section may relate to the status, ownership, and division of property in either or both of the following circumstances:
(a) during the joint lives of the spouses or de facto partners:
(b) when 1 of the spouses or de facto partners dies.
(3) This section is subject to section 47.

21A Spouses or de facto partners may settle differences by agreement
(1) A husband and wife or de facto partners may, for the purpose of settling any differences that have arisen between them concerning property owned by either or both of them, make any agreement they think fit with respect to the status, ownership, and division of that property.
(2) This section is subject to section 47.

21D Subject matter of agreement
(1) An agreement under section 21 or section 21A or section 21B may do all or any of the following:
(a) provide that any property, or any class of property, is to be relationship property or is to be separate property:
(b) define the share of the relationship property, or of any part of the relationship property, that each spouse or de facto partner is to be entitled to when the marriage or de facto relationship ends:
(c) define the share of the relationship property, or of any part of the relationship property, that the surviving spouse or de facto partner and the estate of the deceased spouse or de facto partner is to be entitled to on the death of 1 of the spouses or de facto partners:
(d) provide for the calculation of those shares:
(e) prescribe the method by which the relationship property, or any part of the relationship property, is to be divided.
(2) This section does not limit the generality of sections 21 to 21B.

 

Setting aside relationship property deeds
The Act provides that a Court is able to set an agreement aside if, having regard to all the circumstances, it is satisfied that giving effect to the agreement would cause serious injustice. In addition to considering whether the agreement was unfair or unreasonable at the time it was entered into, or has become unfair or unreasonable because of a change of circumstances (as the test now is), the Court MUST have regard to ..

(e) the fact that the parties wish to achieve certainty of the status, ownership and division of property, by entering into the agreement."

Matrimonial expert, :Auckland barrister Geoff Harrison (telephone 00649-3070370), predicts that it will be very difficult to successfully challenge contracting out agreements: "Which allow for the future creation of relationship property, to be shared equally between the parties in the event of the relationship concluding, after giving credit back to each of the spouses or de facto partners for the value of property introduced by them into the relationship, or during the relationship, particularly where the property is inherited property; or where, in the case of a second or subsequent marriage or de facto relationship, the agreement does no more than protect, as separate property, the assets built up during that earlier period. This will be particularly so if there are no children born of this later relationship and/or if it is of relatively short duration - say 10 years or less."

Contracting out agreements are likely to be set aside if:

The agreement provides that no property produced during the relationship is to be shared.
Where the other party receives no compensation for substantial contributions, either direct or indirect, to the others separate property.
Where there has been a substantial change in circumstances since the agreement, such as the parties having children, and the effect is that the party with primary responsibility for raising of the children has been denied the opportunity of building capital of their own.

In deciding whether to set aside an agreement the Court will also take into account the powers it has the make adjustments of relationship property because of economic disparity, its power to make occupation orders where there are minor children, the adequacy of spousal maintenance and child support, and whether there is a claim to trust assets under section 182 of the Family Proceedings Act 1980.

10. Trusts

There is power, where relationship property has been disposed of to a trust that has the effect of defeating the interests of one spouse, for the courts to make financial adjustments to achieve the intent of the Act, although third party interests are protected. If the trust is established before the relationship and has only pre-relationship property in it, the Court has no power to intervene under this provision. In other words it is now essential (as it has always been) to have all pre-relationship property owned by a trust, before entering a relationship.

4B Law relating to trustees preserved
(1) Nothing in section 4 or section 4A affects the law that applies where either spouse or de facto partner is acting as trustee under any deed or will.
(2) For the purposes of this section, every enactment and every rule of law or of equity continues to operate and apply accordingly as if sections 4 and 4A had not been passed.

10 Property acquired by succession or by survivorship or as a beneficiary under a trust or by gift
(1) Subsection (2) applies to the following property:
(a) property that a spouse or de facto partner acquires from a third person�
(i) by succession; or
(ii) by survivorship; or
(iii) by gift; or
(iv) because the spouse or de facto partner is a beneficiary under a trust settled by a third person:
(b) the proceeds of a disposition of property to which paragraph (a) applies:
(c) property acquired out of property to which paragraph (a) applies.
(2) Property to which this subsection applies is not relationship property unless, with the express or implied consent of the spouse or de facto partner who received it, the property or the proceeds of any disposition of it have been so intermingled with other relationship property that it is unreasonable or impracticable to regard that property or those proceeds as separate property.

44A Application of sections 44B and 44C
Sections 44B and 44C do not apply to a trust under a will or other testamentary disposition. 44B Court may require party to disclose information about dispositions of property to trust (1) In any proceedings for an order under section 25(1)(a), the Court may make an order requiring a spouse or de facto partner to disclose to the Court such information as the Court specifies relating to the disposition of relationship property by either or both spouses or de facto partners to a trust since the marriage or the de facto relationship began.
(2) The Court may make an order under this section on the application of either party to the proceedings or on its own initiative.

44C Compensation for property disposed of to trust
(1) This section applies if the Court is satisfied�
(a) that, since the marriage or the de facto relationship began, either or both spouses or de facto partners have disposed of relationship property to a trust; and
(b) that the disposition has the effect of defeating the claim or rights of 1 of the spouses or de facto partners; and
(c) that the disposition is not one to which section 44 applies.
(2) If this section applies, the Court may make 1 or more of the following orders for the purpose of compensating the spouse or de facto partner whose claim or rights under this Act have been defeated by the disposition:
(a) an order requiring 1 spouse or de facto partner to pay to the other spouse or de facto partner a sum of money, whether out of relationship property or separate property:
(b) an order requiring 1 spouse or de facto partner to transfer to the other spouse or de facto partner any property, whether the property is relationship property or separate property:
(c) an order requiring the trustees of the trust to pay to 1 spouse or de facto partner the whole or part of the income of the trust, either for a specified period or until a specified amount has been paid.
(3) The Court must not make an order under subsection (2)(c) if�
(a) an order under subsection (2)(a) or
(b) would compensate the spouse or de facto partner; or (b) a third person has in good faith altered that person's position�
(i) in reliance on the ability of the trustees to distribute the income of the trust in terms of the instrument creating the trust; and
(ii) in such a way that it would be unjust to make the order.
(4) The Court may make 1 or more orders under subsection (2) if it considers it just to do so, having regard to�
(a) the value of the relationship property disposed of to the trust:
(b) the value of the relationship property available for division:
(c) the date or dates on which relationship property was disposed of to the trust:
(d) whether the trust gave consideration for the property, and if so, the amount of the consideration:
(e) whether the spouses or de facto partners or either of them, or any child of the marriage or child of the de facto relationship, is or has been a beneficiary of the trust:
(f) any other relevant matter.

The Court has power under section 182 of the Family Proceedings Act 1980 on dissolution of a marriage (but not a de facto relationship) to interfere with the trust, but not if there is currently a pre-marriage agreement or in future a pre-relationship agreement.

 

(1) On, or within a reasonable time after, the making of an order under Part 4 of this Act or a final decree under Part 2 or Part 4 of the Matrimonial Proceedings Act 1963, a Family Court may inquire into the existence of any agreement between the parties to the marriage for the payment of maintenance or relating to the property of the parties or either of them, or any ante-nuptial or post-nuptial settlement made on the parties, and may make such orders with reference to the application of the whole or any part of any property settled or the variation of the terms of any such agreement or settlement, either for the benefit of the children of the marriage or of the parties to the marriage or either of them, as the Court thinks fit.....
(6) Notwithstanding subsections (1) to (5) of this section, the Court shall not exercise its powers under this section so as to defeat or vary any agreement, entered into under section 21 of the Matrimonial Property Act 1976, between the parties to the marriage unless it is of the opinion that the interests of any child of the marriage so require. It accordingly remains essential for those with trusts to also insist upon a pre-relationship agreement. The result of failure to plan will continue to be failure

11. Administration Act 1969

The Surviving de facto partner has same rights as a surviving spouse A surviving de facto partner of an intestate (i.e. a person who has died without leaving a will), where the partners have lived in a de facto relationship (including same-sex), is entitled in the same circumstances, and to the same extent, as an intestate's husband or wife. This does not apply where the de facto relationship is one of short duration (i.e. less than 3 years) unless the Court is satisfied that:

* there is a child of the relationship and not being able to succeed on the intestacy would result in serious injustice to the partner; or
* the partner has made a substantial contribution to the partnership relationship and not being able to succeed on the intestacy would result in serious injustice to the partner. Where an intestate leaves a spouse and one or several partners If the intestate leaves more than one partner who is entitled to succeed (i.e. inherit) (whether the partners are from a marriage and/or a de facto relationship), the estate is distributed according to particular rules.

The Act provides that the estate must be distributed or held on trust as if the intestate died leaving only one partner (and any children or other relatives). That one partner's share is then divided equally amongst the surviving partner and all previous partners entitled to succeed. This means that the surviving partner and survivors who were in a partnership relationship with the intestate and who are entitled to succeed are only, as of right, entitled to the portion of the estate to which one surviving spouse or de facto partner would be entitled and the entitlement of others to shares in the estate is not diminished by the intestate having more than one surviving spouse or partner.

12. Family Protection Act 1953

De facto partners may make claims
The Act provides that de facto partners (including same sex partners) who have lived in a de facto relationship for at least 3 years have the right to make a claim against the estate of a deceased partner. This would only apply to the estates of persons who die on or after 1 June 2001.

Court may make an order where there is a relationship of short duration
The Court may make an order in favour of a partner who was living in a de facto relationship of short duration with the deceased, if it is satisfied that there is a child of the relationship, or that the partner seeking the order had made a substantial contribution to the partnership relationship, and (in either case) that failure to make the order would result in serious injustice to that partner.

 

13. Can I make a draft Relationship Property Deed myself?

Using an expert draft Relationship Property Deed creation package (such as DYOdocs). This is the most comprehensive option and cost efficient option open to you. This is because a comprehensive series of questions ensures that you consider and record all important matters.

Using a lawyer.

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