Protection of Assets
Protection of Assets
The Property (Relationships) Act 1976 (“PRA”) sets out, the rules for dividing property when a relationship ends, whether by separation or death. Many people are surprised to learn that after three years of being in a de facto relationship, most property acquired during the relationship is generally divided equally – regardless of whose name it is in, or who paid for it. This can include the family home, KiwiSaver, business interests, investments, and even increases in value of assets brought into the relationship. The three year timeframe is not a hard and fast pre-requisite for equal property division, however. There are a number of other factors that are considered in determining whether or not a relationship is a “de- facto” one and therefore subject to the equal sharing principles of the PRA. Without proper planning and advice, assets you have worked hard to build can unintentionally become subject to a 50/50 split.
Taking early legal advice allows you to understand your risk and put appropriate safeguards in place. This may include entering into a contracting out agreement (often called a “pre-nup”), structuring ownership of assets carefully (depending on whether or not you are yet contemplating a relationship with someone), or reviewing existing arrangements to ensure they are effective. For example, although assets acquired by succession or inheritance are generally regarded as separate property, without proper protections in place there is a risk that property can become intermingled with other property, and therefore be deemed part of the relationship property pool. Good advice is not about mistrust in your relationship — it is about gaining clarity, fairness, and certainty. By addressing these issues upfront, you reduce the risk of costly disputes later and protect both your assets and your peace of mind.
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