Sorting the fact from fiction when it comes to relationship property in NZ – The Prosperity Project
Kiwis are sleepwalking into “pre-nups” they never sign – and some only discover the impact of that once their relationship ends.
Lawyer Holly Egerton told Nadine Higgins on The Prosperity Project podcast that the Property (Relationships) Act effectively operates as a “government prenup”, but many misunderstand what it means and when it applies to them.
“You’re not told, ‘Hey, you now qualify. Hey, here are the rules that you’re living under.’ We all look for this one qualifying factor, decision, time to say we now qualify, and I think that’s what can catch a lot of people out.”
Egerton says keeping finances separate doesn’t necessarily prevent the rules applying, nor does having an asset solely in your name guarantee that it will remain yours.
“That’s a big thing to dispel – the assumption of ‘My name is on this, so it is mine.’”
Even inheritances and gifts, which can start as separate property, may not stay that way.
“Inheritance is separate property under the Government’s prenup, but that’s how it starts – it’s not necessarily how it ends up. It’s what you do with it that then can change its title, its label,” she says.
Putting an inheritance into the family mortgage, for example, could change its status to relationship property.
Egerton warns against relying on promises made when the relationship is rosy. “Please never rely on ‘I would never hold you to that.’ That’s not enough to revoke an agreement.”
Even those who have deliberately contracted out of the default rules can be caught out by assuming a change in circumstances will override previous agreements.
“By having children and getting married, it’s not automatically going to cancel the one you’ve signed. The one you’ve signed is still valid.”
She recommends revisiting an agreement before one partner steps back from work to have children, particularly if it was drawn up under very different circumstances.
Egerton says the point isn’t that everyone needs a contracting-out agreement, but people should understand the rules they’re already living under.
“I think there’s so many assumptions out there,” she says. “Whether you choose to do something about it or not ... at least you’re informed.”
Watch or listen to the full episode of The Prosperity Project for more.
The Prosperity Project is hosted by Nadine Higgins, an experienced broadcaster and financial adviser.
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