Usually, when couples separate after being together for more than three years, the law requires their relationship property be divided equally between each party.
The law on relationship property is determined under the Property Relationship Act. Sometimes if the relationship has lasted less than three years, equal sharing may still apply if that would be considered just. For example, where there are children or one partner has made a substantial contribution to the relationship.
Some property is deemed separate property, not relationship property, and therefore is not shared between the parties. Superannuation, an inheritance and debts may fall into this category. For people who have Trusts, own businesses or property in New Zealand or overseas, there can be additional challenges and complications.
- Superannuation – only superannuation that is earned during the relationship is divided equally. In many cases superannuation is earned before the relationship and that portion of it is separate property.
- Inheritances – inheritances from a family member that is kept separate remains that person’s separate property. Often the person receiving the inheritance uses that sum to pay off the joint mortgage of the parties. In that case, normally the inheritance is converted from being the individual’s separate property to being relationship property.
- Debts –The student loan is a frequent example. If the debt has been incurred before the relationship, that debt is usually the party’s separate debt and not a relationship debt. In other situations, the position is less straightforward.
- Property Owned Before Marriage or before the Relationship Commenced – there are many cases in which Family Trusts are involved and owned by one party and property accompanying the Trust is owned by one party well before the relationship. In some cases, compensation may be payable to the individual who moved into the family home occupied by the other party and owned by the Family Trust. That might occur if there is a reasonable expectation that they would get some interest in the property. Further, they have made a direct or indirect financial contribution.
These are complicated cases that normally can be challenging for the individuals and the lawyers.
- Prenuptial Agreement – if there is an Agreement that is going to ringfence certain property, then that may be separate property; however, such Agreements can be challenged in limited circumstances and become less valid over time. This is especially the case if people’s circumstances change, for example, if children have been born or expectations of the parties are different.
- Section 15 Economic Disparity – an award of compensation under Section 15 of the Property (Relationships) Act 1976 may be made if the Court can be convinced at the end of the relationship the income and the living standards of one partner are likely to be significantly higher than the other as a result of divisions and functions within the relationship. Claims tend to be more likely to be successful where the income of one party is high, i.e. $200,000.00 or more per annum, and their work hours demanding. On the other hand, often the other party has a modest income and has been looking after young children at home for some period.
Other factors that can influence the matter include the age, health and individual choice of each party to pursue a career or not. A common situation is where one party has remained at home to care for the children while the other pursues a successful career. The end result could be that the disadvantaged party receives more than 50% of the total pool of relationship property. The issue of economic disparity frequently arises in our practice, however, very few cases make it to the New Zealand Courts.
- The Wider Family Bach – it is common for parties to visit a family bach and have other holidays. There is often a dispute as to whether the spouse that has no title to the property has some entitlement. This will be determined, like the other matters, on a case by case basis.
The Position Regarding Children
Some male clients come to me saying is it true that the mother always gets custody of the kids? The legal position is that the Court looks at the welfare and interests of the children in any case. When a child is under five years old or has a disability, shared care is less likely. It is a forward-looking assessment and the following factors are important:
- Time – Do you have enough time to spend with your children? For example, if you cannot be home until 6:00 pm during the week, you might be better to have them on the weekend.
- Location – How far apart do you and your ex-partner live? Consider that your children will probably need to remain at the same school and also think about the logistics of moving them between houses.
- Stability – Can you provide your children with stability? This is relevant in an emotional and physical sense. You need to be in a frame of mind in which you can put the needs of your child first. You also need to have adequate facilities such as bedrooms, furniture, toys and books.
- Relationship with your ex-partner – It is important that the children’s upbringing remains consistent to avoid children having to abide by two sets of rules. In order to achieve this, it is best if the parties can communicate effectively regarding their children. Try to separate out your relationship as former partners and your relationship as parents.
Do You Need Lawyers for Property and Custody Disputes?
In relationship property matters, if all the property including the house is going to be sold and the proceeds divided equally, arguably you do not need lawyers much or at all. However, most people are keen to retain the family home and there are often disputes about valuations. In addition, there are a number of other factors above that could make the distribution not equal.
In relation to children, only in high conflict situations do matters normally end up in mediation and in some cases with lawyers through the Family Court.
My experience has been that those people who have a pre-separation interview and are well prepared in terms of their rights and options, tend to cope better with the very difficult process ahead.