The NZ Relationship Property Act: Defining Your Assets, Rights, and Future

• The Property (Relationships) Act 1976 is the primary law governing how property is divided when a qualifying relationship of three or more years ends in New Zealand.
• The starting point for division is a 50/50 split of all 'relationship property', which includes the family home, joint assets, and income earned during the relationship.
• Property is classified as either 'relationship' (shared) or 'separate' (owned by one partner), though separate property can become relationship property over time.
• Couples can enter into a 'Contracting Out Agreement' (or 'prenup') to set their own rules for property division, bypassing the Act's default 50/50 rule.
• Recent court decisions mean that assets held in trusts are facing greater scrutiny, making specialist legal advice more important than ever.

The end of a relationship is one of life’s most stressful events. Amid the emotional turmoil, the last thing anyone wants is a confusing and contentious process for dividing assets. Yet, in our experience, this is exactly what many people face. We believe that understanding your rights and obligations is the first step toward gaining clarity and control during a difficult time.

While it might feel like a distant problem, the reality is that many long-term relationships end. In 2024 alone, there were 7,497 divorces granted in New Zealand. And for every one of those, there are countless de facto relationships that also come to an end. This is where the Property (Relationships) Act 1976 comes in.

The Act provides the legal framework for dividing a couple's property. Its purpose is to recognise the equal contributions, both financial and non-financial, that each partner makes to a relationship. This guide is designed to walk you through the core principles of the Act, helping you understand what it means for you and your family.

The Act applies to couples who are married or a civil union and to a qualifying de facto relationship. For the Act to apply to a relationship, the relationship generally needs to have lasted for three years or more. If your relationship is shorter than three years and you have children with your partner or made a substantial contribution (whether financial or non-financial), you may still have a claim, but the division of property is often handled differently and is not presumed to be 50/50.

A de facto relationship is defined as two people over 18 living together as a couple. The court looks at various factors to determine if a de facto relationship exists, such as the duration of the relationship, the degree of financial interdependence, and whether you present publicly as a couple. It’s not always black and white, and we’ve seen cases where one partner was surprised to learn their relationship met the legal threshold.

The Act splits property into two main categories. Understanding this distinction is fundamental.

Relationship property is the pool of assets to be shared. It typically includes:

• The family home, regardless of whose name it is in.
• All family chattels (furniture, appliances, vehicles, etc.).
• Any property owned jointly by the couple.
• Income earned and property acquired by either partner during the relationship.
• Increases in the value of superannuation or KiwiSaver schemes during the relationship.

Separate property , on the other hand, belongs to one partner individually. This usually covers inheritances, gifts made to one partner, and assets owned before the relationship began. However, a common mistake we observe is assuming separate property will always remain separate. If you use an inheritance to pay down the mortgage on the family home, for instance, that money becomes "intermingled" and is likely to be classified as relationship property.

For qualifying relationships of three years or more, the Act presumes an equal 50/50 division of all relationship property. This is a crucial point. The law explicitly recognises that non-financial contributions—like caring for children, managing the household, or supporting a partner's career—are just as valuable as bringing in an income. It’s a fair principle that prevents one partner from being disadvantaged simply because they weren't the primary earner.

This equal sharing applies to debts as well as assets. If a couple took out a joint loan to buy a car, that debt is also part of the relationship property pool to be divided.

There are rare exceptions where a court might order an unequal division, but the bar is very high. It requires "extraordinary circumstances" that make equal sharing "repugnant to justice." These are few and far between.

Yes, you can. The Act isn't a one-size-fits-all mandate. Under Section 21 of the Act, couples can "contract out" of the default rules by creating their own legally binding agreement. Commonly known as a "prenup," a Contracting Out Agreement allows you to define what is relationship property and what is separate property, and how it would be divided if you separate.

We often recommend these agreements for individuals entering a new relationship with significant personal assets, business owners, or those in second marriages. It’s not about anticipating failure; it’s about creating certainty and protecting both parties. A well-drafted agreement provides peace of mind and can save a huge amount of stress and expense down the track. Costs for these services can vary depending on the complexity of your assets, but the investment upfront is minimal compared to the potential cost of a dispute later.

For many of our clients, particularly those with significant assets, trusts are the biggest source of concern. Historically, trusts have been a primary vehicle for asset protection. Many people use them to structure their affairs to shield assets from future relationship property claims or other creditor claims. But the legal landscape is changing.

The courts are increasingly willing to look through trust structures. A landmark 2025 Supreme Court in Lassnig v Zhou [2025] NZSC 116 is a recent example of how courts treat a settlement made on a trust by the parties to a short term relationship. Although both parties were beneficiaries and trustees in a trust which held their family home, on separation, the court ruled on a 80/20 division in favour of Ms Zhou because her total contribution exceeded that of Mr Lassnig approximately five times. Had the parties entered into a contracting out agreement protecting Ms Zhou’s interests, she would not have needed to go through court to receive in order to achieve the outcome she was after. In short, simply having your assets in a trust is no longer a guaranteed shield. This is where our specialist knowledge of trust law gives us an ultimate advantage when advising on relationship property matters. We understand the nuances and can provide clear advice on how your trust might be viewed by a court.

The law in this area is constantly being updated by the courts to deal with modern life. We are now seeing claims over intangible assets that barely existed when the Act was written. For our latest analysis on recent Supreme Court rulings, including cases on everything from family trusts to the division of copyright in artwork , you can browse our publications.

Ending a relationship is hard enough. Trying to sort out your financial future based on guesswork or outdated information only adds to the pain. We believe in a holistic approach. That is why we partner with professionals like divorce coaches to support your emotional wellbeing and offer flexible funding solutions through JustFund to ease the financial pressure.

If you're facing separation or want to proactively protect your assets for the future, the first step is a conversation. To understand how we can help, particularly if a trust is involved, learn more about our dedicated relationship property services.

_Disclaimer: The information contained in this article is for general informational purposes only and does not constitute legal advice. It is not a substitute for obtaining legal advice from a qualified professional. You should not act or refrain from acting based on this information without first seeking specific legal advice tailored to your unique situation._