Few recent acts of parliament have been as far-reaching as the new Property (Relationships) Amendment Act 2001 ("the Act"). Joan Rotherham, of Timaru Lawlink firm Timpany Walton, considers how the Act will affect division of property.

From 1 February 2002, married couples and people who have lived in de facto relationships for 3 years or more will have the right to receive half of the relationship property if they separate or if their partner dies. This will include people whose partner is a person of the same sex. The present Matrimonial Property Act 1976 will be renamed the Property (Relationships) Act 1976 with amendments.

Relationship property will generally comprise the family home, furniture, vehicles used by the family, bank accounts, superannuation, and life insurance.

If de facto partners separate (or one of them dies) before they have lived together for 3 years, the new act will not apply. However, if they have a child or one of them has made a substantial contribution to the relationship, the court can use the new act if not doing so would result in serious injustice.

When a couple separates 3 years or less after their marriage, any property they accumulated in that time will be divided equally. Any other property will be divided according to the contribution each person has made to the marriage.

Under the new act, if a partner dies after the relationship has lasted for more than 3 years, the surviving partner will be able to receive half of the relationship property. However, the act will give that person two options:

Option A. To apply to the Family Court for half of the relationship property.

Option B. To take either the property left by the deceased partner's will or, if no will exists, the property which would pass to him or her under the Administration Act 1969 (which sets out what is to happen to the property of a person who dies without making a will).

In addition the Property (Relationships) Amendment Act amends the Administration Act 1969. This does not mean that de facto partners should take the risk of not making wills. In many situations the house will be owned jointly and will pass to the surviving partner. However, this is not always the case. If the partners have children and one partner dies without making a will, the Administration Act 1969 will say that the surviving partner would receive only the deceased partner's personal belongings and one third of the rest of his or her property. The other two thirds would go to the couple's children. However, many people would prefer to leave their property to their partner when they die. Where partners have children of previous relationships, they often leave their share of the property to the other partner as a life interest and then have it given to their children after their partner dies.

Under the Property (Relationships) Act the Family Court will be able to make orders about property that has been placed in a trust or a company. This attempts to ensure that relationship property is not put beyond the reach of the Family Court and that husbands, wives or de facto partners are not deprived of assets they have helped to gain.

The Act also allows a lump sum payment to be made to one partner if the other partner's income and living standards are likely to be much higher because they had different roles within the relationship. This may be relevant if one partner has given up a career to rear children. At present it creates only a note of uncertainty.

Both de facto partners and married couples may agree to divide their property differently from what the Act sets up. But they must sign written agreements to do so and they must receive legal advice by lawyers from different law firms before signing.

Partners in existing relationships should seriously consider whether they should enter into such an agreement and should take legal advice accordingly.

Although the new Act will not come into force until 1 February 2002, after I August 2001 agreements made by de facto couples should comply with the new requirements.

Copyright The Lawlink Group Ltd 2001

Every effort has been made to ensure that this information is accurate. However, it is general introductory information only. It does not constitute legal advice and should not be relied on as such. Specialist legal advice should be sought in particular matters.

Joan Rotherham is an Associate in the Lawlink firm of Timpany Walton. Joan has many years' experience in all aspects of family law, in which she has practised almost exclusively for all her career.

Web site: Timpany Walton
Email: joan.rotherham@timpanywalton.co.nz

August 2001