Arriving in New Zealand as a migrant brings a wave of new experiences, from adapting to new cultural norms to grappling with the legal framework that governs life in a new country. Working closely with migrants, we have noticed there is a common misconception that because they are not married, their property will remain separate. However, it is vital that people realise and understand that in New Zealand, under the Property (Relationships) Act 1976 (“Act”), de facto relationships are legally recognised and grant partners rights similar to those of married couples.
While marriage requires an overt act, a de facto relationship can arise much more covertly. A de facto relationship is defined by the Act as a partnership between two individuals aged 18 or older, who live together as a couple (regardless of sex, sexual orientation, or gender identity), that are not married or in a civil union.
When determining whether two individuals are ‘living together as a couple’, several factors regarding the partnership dynamics are considered:
Duration of the relationship: While typically a relationship of three of more years is considered de facto, exceptions exist, for example, if children are involved or if one person has made a substantial contribution;
Shared residence: Evidence of joint living arrangements and shared financial responsibilities;
Financial interdependence: The degree to which partners share financial commitments and support each other financially;
Mutual commitment: Demonstrating commitment through shared activities, decision-making and support;
Care of children: Responsibilities and contributions towards the care and upbringing of children, if applicable;
Public perception: How the relationship is perceived and presented publicly.
The Act governs how property should be divided and applies not only when a relationship ends through separation but also if it ends through the death of a partner. The starting point under the Act is always for an equal division of assets, but there are some provisions that allow for adjustments to the general presumption of equal sharing. Understanding the legal implications of a de facto relationship is crucial for new migrants as they navigate their relationships in New Zealand to enable them to make informed decisions to protect their interests and rights under New Zealand law.
If you do not want the Act to apply to you, you can enter into a contracting out agreement (sometimes referred to as a prenup). This enables you to contract out of the Act by setting out your own agreement as to the status, ownership and division of property in the event of separation (including by death). They can be drafted to simply protect the different contributions to the initial property purchase while keeping everything after that point equal, or they may be drafted in such a way as to keep all of the couple’s assets separate. Some of the frequently asked questions regarding contracting out agreements are answered in this article.
As part of the contacting out agreement process, you should review your will. A will plays a crucial role in estate planning for everyone. If you reside in New Zealand, then it is essential to have a valid New Zealand to ensure assets are distributed according to your wishes in the event of their passing. A will should cover all assets in New Zealand and worldwide (other than real property situated offshore as it is easier to probate real property that is situated offshore via a will of that country). More information regarding wills can be found in this article. It is important to note that a will does not negate the implications of the Act, and while a will is important, the best form of protection against the provisions of the Act, is a contracting out agreement.
Our extensive background in migrant tax law not only enhances our understanding of complex financial matters, but also gives us a rare and distinctive ability to apply commercial insight to the intricate realm of relationship property law. This enables us to navigate the nuances of tax and commercial implications and structuring within the context of property division and contractual agreements, offering clients a comprehensive and strategic approach to their relationship property matters.
This article is intended for informational purposes only and should not replace specific relationship property or asset protection advice. For personalised advice on all relationship property and/or asset protection issues please contact us.
This article was accurate at the time of publishing.
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