Relationship Property
When entering a committed relationship, most people don’t anticipate separation. However, failing to plan for the unexpected can leave you financially vulnerable. Under New Zealand’s Property (Relationships) Act 1976 (the Act), couples who have been in a de facto relationship, married, or in a civil union for three years or more the Act generally requires couples to divide their relationship property 50/50 if they separate—unless they have a legally binding Relationship Property Agreement in place.
Some situations where you should consider a Relationship Property Agreement are where you are entering a relationship with significant assets, you’re blending families, or you are receiving an inheritance or family gift.
What is a Relationship Property Agreement?
A Relationship Property Agreement is a legally binding contract that allows couples to decide how their assets and liabilities will be divided if they separate, rather than relying on the default rules of the Act. This agreement can help:
- Protect pre-relationship assets (e.g., a home you owned before meeting your partner)
- Safeguard business interests and investments from claims in the event of separation
- Ensure children from previous relationships inherit as intended
- Protect funds received from family or inheritance
- Provide clarity and fairness in financial matters
You don’t have to decide to keep everything separate from your partner. The agreement could apply to one specific asset such as the home you live in, if you want the agreement to be limited. Or you can ring-fence the value of certain assets while still allowing for the buildup of relationship property over time. There is no “one size fits all” – you can put an agreement in place that meets your needs and reflects your shared intention with your partner.
What Happens Without an Agreement?
If you don’t have a Relationship Property Agreement, your assets may be divided under the Act’s default 50/50 rule. Even if your partner has said they won’t touch your assets if you separate, legally this statement won’t protect you at all. This could mean:
- The home you owned before the relationship may be considered relationship property
- Your business or investments could be subject to division
- Inherited or gifted assets may not be fully protected
- A drawn-out legal battle could cause emotional and financial strain
For many people, these risks are simply too high to ignore.
When Should You Put an Agreement in Place?
The best time to enter into a Relationship Property Agreement is early in your relationship, before the three-year threshold is met. However, you can enter into one at any time, even if you’ve been together for years or you are already married. The key is to have the agreement properly drafted, executed and regularly reviewed and updated to ensure it stands up in court if ever challenged.
It is a common misconception that you must be physically living together to be a in de facto relationship. However, the Act clearly states that “living together” is just one of the factors that is to be taken into account when determining whether two people are in a de facto relationship. That is all the more reason why it is important to put an agreement in place sooner rather than later.
Think of it like an insurance policy. You hope that you never need to use it but it is best to have just in case.
What Makes an Agreement Legally Enforceable?
For a Relationship Property Agreement to be legally binding in New Zealand, it must meet strict legal requirements:
- Both parties must receive independent legal advice – this means each party needs to have their own separate lawyer
- The agreement must be in writing and signed by both parties
- Each party’s lawyer must witness their signature and provide a certification that they have advised their client as to the effects and implications of the agreement.
Failure to meet these requirements will render the agreement invalid, so it’s crucial to seek expert legal advice.
How We Can Help
At Armstrong Murray, we specialise in helping our clients navigate complex relationship property matters with confidence. We’ll work with you to craft a tailored Relationship Property Agreement that reflects your unique circumstances and protects your financial future.
Don’t leave your assets to chance. Get in touch with us today to ensure your assets are protected, no matter what the future holds.
If you’d like us to assist you with your relationship property, get in touch with our team on enquiries@armstrongmurray.co.nz or 09 489 9102.
This article is brief and general in nature. You should not treat it as legal advice and should seek professional advice before taking any action in relation to the matters dealt with in this post. Armstrong Murray accepts no liability for losses suffered by any person or organisation who may rely directly or indirectly on this post.
