If we split, who gets the family dog and do I have to give back the rings?
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Separation can be a difficult process. Not only are there a lot of emotions involved, but there are likely to be assets that are owned jointly, or separately but which have been used by both parties during the relationship. Working out who gets to keep what can be straight forward in some cases, but often the matter is more complex than you may expect.
The Property (Relationships) Act 1976 (“PRA”) applies to marriages, civil unions or de facto relationships of three years or more. In limited circumstances, the PRA can also apply to relationships of shorter duration.
What is relationship property?
The PRA defines both relationship property and separate property.
The family home and family chattels, whenever acquired and in whoever’s name they are legally owned, are relationship property. Contrary to popular belief, whether or not you owned the family home or chattels before the relationship, they will be relationship property dividable equally between both parties to the relationship (subject to certain limited exceptions). Family chattels can include furniture, appliances, household tools, pets, as well as cars, caravans, trailers and boats if they were used wholly or principally for family purposes. Gifts from one spouse or partner to the other are generally not regarded as relationship property – so no, you don’t have to give back the rings.
Relationship property may also include superannuation and KiwiSaver, shares and investments, business interests, life insurance policies, rental and investment properties, property acquired in contemplation of the relationship, rights in respect of a trust, as well as relationship debt (which does not have to be in the parties’ joint names). Bank accounts which hold funds earned or received during the relationship are also likely relationship property despite being in the name of only one of the parties.
Taonga and heirlooms, as well as chattels used wholly or principally for business purposes, are excluded from the definition of family chattels. This means these items will usually be separate property rather than relationship property, however this is decided on a case-by-case basis.
What is separate property?
Any property that is not relationship property is separate property. Such property does not need to be divided between the parties to the relationship.
Generally, separate property also includes:
- Property which was acquired by either party whilst they were not in a relationship and that has not been used during the relationship for family purposes;
- Property acquired out of separate property or any proceeds of sale of separate property;
- Any increase in value of separate property and any increase in income or gains derived from separate property;
- Property acquired from a third person by gift, inheritance, or as a beneficiary of a third person’s trust.
It is important to keep property acquired by succession, survivorship, gift, or under a third party’s trust separate if you intend it to be separate property. If property can be seen to have been intermingled with relationship property, making it unreasonable or impracticable to regard it as separate property, it will become part of the relationship property pool.
How is relationship property divided?
While relationship property is generally divided equally between the parties of the relationship, there are limited circumstances where division should occur in unequal proportions. This may be due to economic disparity between the parties because of the effects of the division of functions within the relationship or in extraordinary circumstances that would make equal sharing repugnant to justice – although this is a high threshold to meet.
In order for your lawyer to advise you on what the full relationship property pool consists of and what your legal entitlements are, a process of disclosure by both parties of all assets, debts and interests must take place. Values will be determined, as well as the status of the item as relationship property or separate property. Following the completion of that process, the division of property can usually then be agreed by way of negotiation.
Will we need to go to Court?
Most people do not need to resort to the Family Court in order to resolve their relationship property division. It is only if an agreement cannot be reached between you and your former spouse/partner that Court proceedings are needed.
Who gets what?
You won’t walk away with half of a car so don’t get the chainsaw out. Generally, global division of relationship property can be reached without property needing to be sold – or cut in half. This involves taking into account the total value of the assets being retained by each party, and one global adjustment figure being paid by one party to the other party to ‘equalise’ the overall division so that each party is keeping 50% of the total net value of the relationship property pool.
What about the pets?
With the classification of pets such as cats and dogs as family chattels, you obviously will not both be able to keep your fur babies. The court has formulated their own way of determining who gets to keep the pet based on the pet’s best interests. This means the court considers things like who takes the best care of the pet, who is able to provide the best home for the pet and the pet’s needs.
Independent legal advice
Each party must receive independent legal advice as part of entering into a legally binding Separation Agreement. To be valid as a full, final and binding settlement, any agreement must be in writing and signed by both parties after independent legal advice and in the presence of their lawyers..
If you find yourself experiencing a break up of a long term relationship, the specialist Family Law team at Holland Beckett Law can offer you practical and pragmatic advice with care and sensitivity. We have a team of lawyers who are experienced in negotiating and drafting Separation Agreements, or taking matters to court if needed.