The Law Commission's final recommendations for changes to the Property (Relationships) Act 1976
With the Law Commission's review of the Property (Relationships) Act 1976 (Act) now complete New Zealanders could experience a major change to the way their relationship property is dealt with if the 140 official recommendations are adopted. The Act was first introduced in 1976 but did undergo a fairly big overhaul in 2002 with its last amendments, which included de facto couples under the regime. This review is much bigger still.
The recommendations are aimed at bringing this piece of social legislation up to speed with New Zealand society; to better reflect the forms and styles of relationships that are becoming increasingly common such as later-in-life relationships and de facto partnerships.
As outlined in our April news release, the Law Commission looked at all aspects of the Act, but with significant emphasis on:
- how the Family Home should be divided, particularly in light of the increase in later-in-life relationships;
- the interests of children in the division of relationship property; and
- the ability of the Family Court to vary and make orders against trusts, which are a significant part of our society.
The report now formalises recommendations falling under each of these categories, and more.
The theme of the Law Commission's recommendations is to base property division on the fruits of the relationship rather than the use of the property. Significant recommendations include:
- Doing away with the assumption that a Family Home is relationship property to be shared equally. The Law Commission recommends that new criteria are introduced to assess whether a Family Home is relationship property or separate property. This could mean that a Family Home acquired before a relationship started (or received as a third party gift or inheritance) would not be relationship property and would not need to shared equally at separation - a key difference from how the law operates presently.
- Introducing Family Income Sharing Arrangements (FISAs). These will provide simpler and more accessible methods to address the differences in income and earning potential between partners. The Law Commission recommends that the FISAs are written into law and provide formulas for income sharing between parties after separation, for a maximum of five years.
- Broadening the Family Court's ability when it comes to accessing property in trusts when dividing property at separation.
If such recommendations are adopted, the revised law will impact all of those entering into relationships and those who are already in relationships. It is important to bear in mind that these are currently only recommendations. The government has not indicated which recommendations it will be adopting (if any) - however, the feeling among relationship property lawyers and wider New Zealand is that the Act is overdue for an overhaul.
If you would like to talk over any aspect of relationship property, please get in touch with us.