Whether you are married, or in a de facto relationship, whether you have a pre-nup or not, in the event your relationship comes to an end either through separation or death the division of property and assets may be affected by the terms of the Property (Relationships) Act.

With around 10,000 marriages being dissolved each year changes to this Act may have consequences for you or those dear to you.

At the time the Act came into force, it introduced substantial changes to the law in New Zealand with regards to the division of relationship property and significantly, extended the Act’s application to include de facto relationships. The Act applies to relationships of three years duration, or more, (whether married, in a civil union or a de facto relationship) although it could apply sooner depending on the circumstances. The general premise of the Act is that a couple’s property will be shared equally between them, although there are some exceptions to this rule.

The Law Commission recently completed a review of the legislation.

Some of the key changes proposed are as follows:

1. The family home should not necessarily be shared 50/50 particularly if one party owned it prior to the commencement of the relationship. In that situation the proposal is that only the increase in value would be shared equally.
2. When couples have children and have been in a relationship for 10 years or more, or developed or given up careers due to the relationship, this may qualify them to enter into a Family Income Sharing Arrangement (“FISA”). A FISA would enable the combined income of the couple to continue to be shared for a limited period of time. It is proposed that a limited time could be up to a maximum of five years.
3. The Court to have wider powers with regard to the sharing of trust property. At present, if a trust is involved the Family Court has limited jurisdiction, and often such matters need to be referred to the High Court which is expensive and time-consuming. The new Act will see the Family Court having increased jurisdiction where trusts are involved.
4. The best interests of the children are to be given more significance including providing the parent who has the day-to-day care of the children automatic rights to remain in the family home post separation for a limited period.
5. It is proposed the Court would have wider powers to deal with parties whose conduct causes unnecessary delay and expense.
6. The preparation of material providing partners who are separating with sufficient information as to the law and providing options for resolution of disputes relating to the division of relationship property.

The Law Commission is seeking feedback to the proposed changes by 14 December 2018 and anticipates publishing its findings in 2019.

Other than the usual timing issues, it is not yet known what the Law Commission’s recommendations to the Government will be, the extent to which its recommendations may be translated into legislation and perhaps more importantly, how those recommendations may impact on existing ‘pre-nups’ contracting–out of the Act.

What is clear though is that in most cases, any form of Agreement recording what is your property will be better than not having an agreement at all.