NEW ZEALAND Law and Practice Contributed by: Greg Ambler and Elizabeth Heaney, Tompkins Wake
4. Marital Property and Succession 4.1 Property Regimes During Life and Deathtime Rights and Protections New Zealand succession planning is heavily guided by the Property (Relationships) Act 1976, which classi- fies property as separate or relationship property and, on death, allows the surviving partner to elect either a division of relationship property (Option A) or take under the will or intestacy (Option B). Lifetime transfers of separate property by one partner are permitted, but transfers of relationship property or dispositions intended to defeat the other partner’s rights can be unwound or compensated under Sec- tions 44 and 44C of the Property (Relationships) Act 1976, making these rules a “clawback” regime. In practice, New Zealand law therefore protects sur- viving partners through equal sharing principles, elec- tive rights on death, and statutes that prevent lifetime dispositions from undermining marital property enti- tlements. 4.2 Prenuptial and Postnuptial Agreements Under Sections 21, 21A and 21B of the Property (Relationships) Act 1976 (PRA), parties are able to contract out of the provisions of that Act. However, those contracting out agreements (under Section 21) or settlement agreements (under Sections 21A and 21B) are only binding on the parties if they meet the statutory criteria set out at Section 21F of the Act. Section 21F of the PRA sets out the procedural requirements for agreements under the Act as follows: • the agreement must be in writing and signed by both parties; • each party to the agreement must have independ- ent legal advice before signing the agreement; the • signature of each party to the agreement must be witnessed by a lawyer; and • the lawyer who witnesses the signature of a party must certify that, before that party signed the agreement, the lawyer explained to that party the effect and implications of the agreement.
The procedural elements must be met (as described above) for an agreement to be enforceable. However, even if the agreement meets all procedural require- ments, the court may still set aside an agreement if enforcing it would result in a “serious injustice”. Courts will generally uphold an agreement where: • both parties fully understood the legal and practical consequences; • there was no coercion, imbalance of power or exploitation; • the agreement was entered into freely, without undue pressure; • the outcome remains fair in light of the relation- ship’s evolution, including contributions, sacrifices or unexpected changes; and • both parties made full and frank disclosure of prop- erty and financial circumstances. 5. Tax Treatment of Lifetime Transfers and Testamentary Dispositions 5.1 Lifetime Transfers Tax on Gifts Gift duty used to apply to lifetime gifts in New Zea- land, but only to gifts made before 1 October 2011. If a person made gifts totalling NZD27,000 or more in any 12 month period before that date, gift duty was payable. Since 1 October 2011, gift duty has been abolished, and no duty applies to any gifts made after that date. Personal Tax New Zealand’s income tax system is governed pri- marily by the Income Tax Act 2007 and the Tax Admin- istration Act 1994, which also outlines Inland Reve- nue’s authority to administer and enforce tax laws. Income tax is charged annually on a taxpayer’s tax- able income, with the standard tax year running from 1 April to 31 March, and individuals and self employed persons are required to file returns after year-end. Tax rates are set each year, with current individual rates applying from 1 April 2021 onward.
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