NEW ZEALAND Law and Practice Contributed by: Violet Yu, Jonathon Russell and Sandy Chen, Cone Marshall Limited
The Property (Relationships) Act 1976 entitles a spouse or de facto partner to claim a division of rela - tionship property before the estate is distributed. If a claim is successful, the spouse or partner’s entitle - ment may take priority, reducing the estate available for distribution to children as per the will. Claims under these Acts can be resolved outside the court system through consensual agreements, pro - vided all parties obtain independent legal advice. 2.4 Marital Property The Property (Relationships) Act 1976 (PRA) governs property division for married, civil union and de facto partners (including same-sex couples) in New Zea - land, applying to relationships of three years or more, or shorter with specific circumstances (eg, a child or The PRA uses a deferred community property regime. Property is not automatically “joint” during the rela - tionship but all “relationship property” is divided equally (50:50) upon separation or death, unless oth - erwise agreed. • Relationship property – includes the family home, chattels, joint property, and income/assets acquired during the relationship, subject to equal sharing. • Separate property – covers pre-relationship assets, inheritances or gifts, unless intermingled with relationship property (eg, using personal income to improve a separate asset). Transfer of Property A partner cannot transfer relationship property to defeat another’s PRA rights without consent. Key leg - islation and remedies available under the PRA, Family Proceedings Act 1980 (FPA) and common law include the following. • Section 44 (PRA) – If property is transferred (eg, to a trust) to defeat a partner’s rights, courts may order its return or compensation, unless the recipi - ent acted in good faith for adequate consideration. • Section 44C (PRA) – If relationship property is transferred to a trust during the relationship, significant contributions). Property Classification
defeating a partner’s rights (without intent), courts may order compensation from relationship/sepa - rate property or trust income. • Section 182 (FPA) – Courts may vary nuptial trusts upon marriage/civil union dissolution to address benefit disparities. • Constructive trust – Arises if a partner contributes to trust property with a reasonable expectation of benefit, requiring compensation. Prenuptial/Postnuptial Agreements Section 21 of the PRA allows for couples to “contract out” of the default equal sharing provisions. There are some formal requirements, including: • agreement must be in writing, signed and wit - nessed by lawyers; • both parties must receive independent legal advice; and • terms of the agreement must be fair and reason - able. Courts may set aside agreements where the circum - stances could amount to causing “serious injustice” (Section 21J, PRA) considering the overall fairness of the agreement, the amount of time that has elapsed, and any other circumstances that may apply. Formal relationship property agreements that comply with the technical provisions of the PRA are essen - tial for clarifying and confirming how assets should be owned, in the event of a marriage or relationship breakdown. 2.5 Transfer of Property Transfers of property in New Zealand generally do not give rise to immediate tax for recipients, whether received during life (by gift or trust distribution) or on death (via a will or estate distribution). There is no inheritance tax, gift tax or capital gains tax on receipt. However, a future tax liability may arise on a later sale. Where property is acquired by purchase, the cost used for future tax calculations (for example, under the bright-line test or depreciation rules) will be the purchase price, allocated between land, buildings and chattels as required.
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