Media Release from the Family Law Section

31 July 2001

Contracting out of new Property (Relationships) Act
From 1 August, de facto (including same sex) or married couples will be able to contract out of the new Property (Relationships) Amendment Act 2001.

Relationship property is property owned, acquired and used by couples (married, de facto, same sex) who have lived together for more than three years. In some cases, where there are children and in other circumstances, it may affect relationships of less than three years.

Although the Act does not come into force in full until 1 February next year, from 1 August couples can choose to contract out of the new law so that it does not apply to them.

The Act brings in significant changes to the way property is divided when relationships end so couples need to make themselves familiar with it, says the Family Law Section of the New Zealand Law Society.

In particular, the Act applies automatically to all couples so those who do not want to be covered need to contract out to ensure it does not apply to them. This is particularly relevant for de facto couples who may have chosen not to marry because they did not want to be covered by matrimonial property legislation.

Agreements to contract out need to be in writing and each party must be independently advised by a lawyer who will certify that they have given their client a full explanation of the Act’s effects.

Anyone who is in a relationship now or who enters a new relationship should give the Act careful thought, as if they were making a new will or buying a house together.

Some important effects of the new Act are:

• Relationship property will be divided equally following the end of a relationship that has lasted more than three years, unless extraordinary circumstances make equal sharing repugnant to justice.
• The court will have greater powers to postpone property sharing where it is necessary to avoid undue hardship to children.
• Partners in a relationship may still have separate property but where a person’s separate property increases in value, in some circumstances the separate property may be treated as relationship property.
• The court can order lump sum payments or the transfer of property if a partner would otherwise be disadvantaged.
• The court will be able to take into account any property that has been disposed of during the relationship to a family trust and may require an appropriate adjustment to be made.
• If a partner dies, the surviving partner can choose to receive property either under any will or under the terms of this Act.

The Family Law Section believes that the Act will have as much effect on couples with modest assets as it will on wealthy couples. It is important for all couples to get legal advice and give careful consideration to how the Act will affect them. To do nothing may be to court disaster.