There are 5 key steps to dividing relationship property in NZ. Here we explain each step involved in the process, to help you understand and successfully begin your journey of dividing relationship property.
Step 1 – Identify the relationship property
Make a list of the relationship property and give values for each. It’s important to note that some property will have exact values, e.g. KiwiSaver schemes (if the scheme was started during the relationship) and bank account balances at separation. Whereas, other properties will have approximate market values, such as:
- the family home;
- cars; and,
- household items.
For second-hand property, such as cars and household items, it is the second-hand market value that is noted, not the amount paid for these items. There is a huge difference in value between the price of a new lounge suite and the same lounge suite six months later.
Step 2 – Identify the relationship debts
In broad terms, relationship debts are joint debts or debts that are for the benefit of the relationship itself. Common examples of relationship debts are:
- the mortgage over the family home,
- credit card debt used to buy groceries or petrol,
- or a loan to buy a car used for the family.
On the other hand, personal debts aren’t taken into consideration when calculating the division of relationship property.
An example of personal debt could be a loan used for a non-relationship purpose such as buying a car for a husband’s mother.
Step 3 – Calculate the net asset pool
Once you have worked out the value of the relationship property and the total relationship debt at separation, you can then calculate the relationship property to be divided. The net asset pool can be calculated using the following formula:
(Value of all relationship property) – (total amount of relationship debt) = net asset pool
Step 4 – Divide the relationship property
Dividing the relationship property will involve both parties agreeing on who will keep particular items of property and if the property will be sold and the proceeds divided. This step will also require both parties to agree on who will pay off particular debts.
Often the person that keeps an asset will take over the debt. A cash adjustment payment may be considered so that each party receives an equal share of the net asset pool.
For example, if the family home is kept by one partner then, depending on the value of the property kept by the other partner, there will usually have to be a cash adjustment payment to equalise the division of the relationship property.
We usually suggest to our clients that they agree on the division of the household items with their ex-partner because the legal costs of dividing household items is often out of all proportion to their value.
Step 5 – Implement the division of relationship property
An expert relationship property lawyer can draft a separation and relationship property agreement for you. An agreement is only binding in full and final settlement of all issues if both parties have received their own independent legal advice on the division of the relationship property.
A lawyer will also in many cases take care of the conveyancing work so that the one partner keeps the house and makes sure that the other partner gets paid for his/her share of the house.
DIY division of relationship property
There are many technicalities and exceptions to the rules of relationship property and we highly recommend seeking specialist advice before agreeing on anything with your ex-partner. This will help to ensure that you get what you’re entitled to.
by Clinton Light, Special Counsel, Shine Lawyers, Christchurch
Expert relationship property lawyers
The Relationship Property team at Shine Lawyers New Zealand has a wealth of experience in representing clients going through a separation. Our depth of experience ensures we are able to achieve the best result possible for our clients, helping them get the outcome they need so they can move forward with their lives.
Feel free to phone us to discuss, or make an appointment to come in to meet us, so that we can start helping you to come up with solutions. Contact Shine Lawyers expert relationship property team today for advice specific to you.