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Property (Relationships) Act 1976 changes proposed

Published: 9th April 2019

Author: Sarah White, Malley & Co

Published in: Fineprint 78

For better, for worse?
The law governing the division of property when a relationship ends is, after more than 40 years, set to change following the Law Commission’s comprehensive review of the Property (Relationships) Act 1976 (the PRA).

The Law Commission has identified changes that it believes should be made to ensure the regime better reflects the reasonable expectations of New Zealanders. We set out some of the proposals that may be relevant to you or your family.

The family home
Under the current law, in a marriage, civil union or de facto relationship of more than three years, the family home is automatically considered to be relationship property and subject to equal sharing. Under the changes proposed, the family home will not necessarily be shared 50/50, particularly if one partner owned it before the start of the relationship. In that situation, it is proposed that only the increase in value would be subject to equal sharing.

Clean break
The foundation of the current PRA is the idea that couples should start afresh, free from financial ties to each other, as soon as practicable after their relationship ends. The proposed changes, however, include an ‘overarching obligation’ on the courts to have regard to the best interests of any minor or dependent children. This includes a proposal that the parent who has day-to-day care of the child or children has an automatic right to remain in the family home for a limited period.

Family Income Sharing Arrangement (FISA) proposal
A significant proposal is to pool and share partners’ incomes after separation through a Family Income Sharing Arrangement (FISA). In a relationship of 10 years or longer, or where there are children involved, it recommends that in circumstances where, during the relationship, one partner has given up their career or declined a career advancement opportunity to make a contribution to the relationship, or their spouse has been able to advance their career due to the contributions of their partner to the relationship, this may entitle them to share in a FISA.

It is proposed the amount and duration of a FISA would be determined by a formula equalising the partners’ incomes for a period of time that is approximately half the length of the relationship up to a maximum of five years.

Trust property
Presently, the jurisdiction of the Family Court to make orders relating to trust-owned property is limited. Often, matters related to trusts can involve High Court proceedings which can be expensive and protracted for all concerned. Under the proposed changes, the Family Court would have greater jurisdiction to make orders involving trust-owned property.

Early days yet
If your relationship is ending, or you have already separated, it’s important that you get advice early on so that you can make informed decisions. If you would like to talk over any aspect of relationship property and how ending a relationship works from a legal perspective, please get in touch with us.

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