Protecting Your Assets From a Relationship Breakdown

by Debbie Dunbar - Morrison Kent

Whether you are single or in a relationship, if you have assets you would like to be protected in the event of a relationship breakdown then read on. You may have a house, a business, a rental property, inherited funds or a car that is your pride and joy. Each of those assets (and more) can be items that your partner (or future partner) may have an interest in should you separate or pass away.

In New Zealand when a couple separate, if they have been together for three years or more, the general rule is that all of their relationship property is to be divided equally. Relationship property can include:

  • The home you live in as a couple;
  • All family chattels;
  • Motor vehicles that are used for day to day use;
  • Money saved and income earned during the relationship; 
  • Items purchased with that income during the relationship;
  • Bank accounts;
  • The value of any Kiwisaver/Superannuation policy;
  • A business/company shares; and 
  • Debts. 

Items that would usually be considered separate property, and therefore not available for division between a couple (for example, inherited funds), can become relationship property depending upon what you do with those funds. For example, if you use inherited funds to reduce the mortgage on your family home, the inherited funds will likely form part of your relationship property from then on. 

In the event you do not want the presumption of equal sharing of all relationship property to apply to you, then you need to obtain advice, specific to your situation, as to options available to protect your assets.

Setting up a Trust could be the right course of action for you, but that will not be the best asset protection avenue for everybody. For some, a Relationship Property Agreement (Contracting Out Agreement) that protects assets and/or debts as the separate property of one partner will be the best form of asset protection (either instead of, or as well as, a Trust). In order for a Relationship Property Agreement to be binding, both partners must have independent legal advice and sign the agreement with their lawyers.

Agreements of this nature can be entered into at any time during a relationship, whether before the three year period or beyond.

If you would like any further information or advice please contact either the article author: Debbie Dunbar, or the Morrison Kent Wellington office  (04) 472-00 

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