New Zealand Divorce Law: the Property Relationships Act
One piece of legislation to be aware of in New Zealand is the 2002 Property Relationships Act (PRA). It governs what happens to a couple’s assets if one of them dies or if the relationship breaks up.
Who does New Zealand's Property Relationships Act apply to?
The most surprising aspect of the Property Relationships Act for UK migrants is that it treats same-sex, de facto (common law) and civil union partnerships the same way as married couples. Additionally, the PRA applies once a couple has been living together for three years – less in relationships where children are involved.
How does PRA divide assets?
Under the Property Relationship Act, couples are entitled to an equal share of their joint assets if the relationship ends. In cases where one of the partners may be disadvantaged by this, they may be awarded a larger share of the couple’s assets or a lump sum.
According to Christchurch lawyer Henry Brandts-Giesen from Helmore Ayers Lawyers,
Under the
PRA if a relationship ends then property that the couple owns is classified as
either:
-
Relationship Property or
-
Separate Property.
The family
home and chattels are always classified as Relationship Property no matter
whether they were acquired before the relationship commenced or subsequently.
Any other property acquired by either party during the relationship will also
be Relationship Property - except in certain circumstances.
Property
acquired before the relationship began and other property acquired by
inheritance is usually Separate Property provided it has not been intermingled
with Relationship Property.
It is a fundamental principle of the PRA that Relationship Property is
divided equally except in extraordinary circumstances. Generally
speaking there will be significantly less Separate Property in a long term
relationship than would be the case if a relationship ends after only a short
period of time
.
What if one partner dies?
If one partner dies, the surviving partner has the choice of whether to accept what they have been left in their partner’s will, or claim a half share of their relationship property.
How are common law relationships defined in New Zealand?
A common law relationship, or de facto relationship as it is usually known in New Zealand, is seen by the courts has being a couple over 18 years of age who live together. The degree to which their personal and financial affairs were merged is among the factors which are taken into consideration by the courts.
PRA can apply to assets and debts, so there was widespread concern when the legislation was introduced that it would lead to flat mates and people in their first relationships would be caught out both by the relatively short time frame and the flexible definition of de facto relationships, but this does not appear to have happened.
Contracting Out of PRA
If a couple does not wish their property to be divided equally if their relationship ends, they need to Contract Out. Contracting out allows a couple to determine how their current and future relationship property is to be divided. Both parties are required to take separate legal advice.
Further Information
For more information about divorce in New Zealand, what constitutes relationship property and what is separate property, contracting out, and relationships of short duration, please check the resources available on the NZ Law Society website .
Please note that the Property Relationships Act makes it especially important to get good legal advice when making your will or setting up a trust, especially if your family is, like many, “complicated”.
Broadbase International will work with you every step of the way to help you make a confident start to your new life in New Zealand. Please contact us if you have any questions about the financial side of life in New Zealand, and don't forget to order your free copy of our comprehensive New Zealand Guide.
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