“For better or for worse, for richer of for poorer, in sickness and in health, to love and to cherish, till death do us part.”

Many people make these vows, or they opt out of marriage and start living together. In any case, the cold reality is that the marriage/relationship you saw as being everlasting may not be forever and your assets (including those from your inheritance or gifts from families) and liabilities (some partners try to protect their better half from their own debt) may be automatically shared under law.

jen-and-bradPeople “ooh”ed and “aah”ed when Brad Pitt tore up the pre-nup agreement prepared by his lawyers on the night before he wed Jennifer Aniston. Brad’s lawyers must have cringed while all the girls around the world saw this as a very romantic gesture of good will. Brad probably regretted this 5 years later, when the couple filed for divorce.

Nowadays, many sophisticated couples or “blended” families (especially those who have already been through the horrors of separation negotiations) view a pre-nup, mid-nup or post-nup as being beneficial to both parties in being able to walk into a relationship with eyes wide open. Here is an introduction to the defaulting position of relationship assets for married and de facto couples in New Zealand.

• Did you know that after you have been together in a “de facto relationship” or have been married for more than 3 years, each of you in that relationship will have the right to claim half of all “Relationship Property” pursuant to the Property (Relationships) Act 1976 (”the Act”)?

• “Relationship Property” includes, but is not limited to all assets (residential/rental properties, cars, chattels, Kiwisaver, superannuation, bank accounts), liabilities (credit card debt, bank loans, hire purchases and student loans) and all income each of you have (including salary, rent, inheritance, investments) even if you have treated them as being separate by separating your accounts, management or ownership.


• A “de facto relationship” under the Act is defined widely and includes all of these factors (none of which are determinative):

(a) the duration of the relationship;
(b) the nature and extent of common residence;
(c) whether or not a sexual relationship exists;
(d) the degree of financial dependence or interdependence, and any arrangements for financial support, between the parties;
(e) the ownership, use, and acquisition of property;
(f) the degree of mutual commitment to a shared life;
(g) the care and support of children;
(h) the performance of household duties; and
(i) the reputation and public aspects of the relationship.

• While you may believe that an asset/liability is “separate” because it is under your separate personal name, this may not be the case in reality after 3 years of being together.

• If you wish to contract out of this default position, you will need to sign a “contracting out agreement” (known as a section 21 agreement). Such an agreement requires each of you to obtain independent legal advice and disclose ALL of your assets, liabilities (supported by market valuations where necessary). Each lawyer will not only witness the agreement, but give you legal advice and certify the agreement as being fair so it is important you each get proper legal advice before signing.

• A contracting out agreement can cover previous/current/future properties (which include assets and liabilities) and should be seriously considered by people in relationships who wish to protect their assets, especially if you have assets from trusts/inheritance etc. that you wish to keep separate.

To read more about the author Tina Hwang click here.

You can download the PDF version of this blog here.

Please feel free to contact the staff at Queen City Law for further guidance.