What is relationship property?

Relationship property includes:

• the family home, even if it was acquired by one partner before the relationship began or by inheritance, gift or via a trust.
• the family chattels (furniture, fittings, household equipment and appliances, vehicles, boats, etc) even if they are in one person’s name only
• any common or jointly-owned property
• in certain circumstances, separate property that has been intermingled with relationship property
• property acquired before the relationship began if it was intended for the couple’s common use or benefit
• all income earned and property bought after the relationship began
• the value added during the relationship to superannuation and life insurance policies.

What is separate property?

Separate property can include:

• inheritances and gifts
• heirlooms and taonga
• property acquired under a trust
• property that the partners declare is separate under a s 21 or Contracting Out Agreement (or pre-nup)
• property acquired before the relationship began
• property acquired with the proceeds of separate property and not intended for the use or benefit of both partners.

When does separate property become relationship property?

Where the application of relationship property, or the direct or indirect actions of the other partner, contributes to an increase in the value of separate property, that increased value may be classified as relationship property.

The family home and family chattels are always relationship property no matter whose name they are in or how they were acquired, unless governed by a s 21 or Contracting Out Agreement (pre-nup).

How are debts dealt with?

Just as assets may be either relationship property or separate property, debts may be relationship debts or personal debts.  This is regardless of which parties name the debt is in.  The responsibility for relationship debts is shared.  Personal debts remain the responsibility of the person who incurred them.

Relationship debts are:

• those incurred jointly (eg, a joint hire purchase agreement)
• those incurred in the course of a common enterprise (such as a business that benefits both parties)
• debts incurred to acquire, improve or maintain relationship property (eg, a bank loan to renovate a house)
• those incurred to manage the affairs of the household (eg, purchases of household items, holidays, car, etc)
• those incurred for the purpose of bringing up a child of the relationship.

Personal debts are those incurred to acquire or improve separate property or those incurred before the relationship began or after it ended.

In some circumstances, a student loan may be classified as a relationship debt depending on what it was used for (eg, joint living costs). Some debts (eg, a bank overdraft) may be partly a relationship debt and partly a personal debt.