Setting the timer on relationship property

OPINION: In the olden days, when marriage was a thing, we knew exactly when a relationship started.

There was three weeks reading the bans of marriage in church (plenty of warning) and then, on one special day, the couple signed some papers. The couple becomes a couple and the time was well recorded and beyond dispute.

Today, relationships can sneak up on people. We may know the time that the relationship became serious but exactly when the couple turned into an item can be a bit hazy.

Was it when he started to leave a toothbrush at her house? Was it when she started coming to his work socials?

Or was it when he told his mother that he was giving up his flat and moving in with her (even though he had not spent a single night in the flat for the last three months)?

This is important because the law says that if two people have been a couple for three years, some assets and liabilities may be relationship property and are to be shared if the relationship fails.

Note that there can be two uncertainties: first, what is a couple? Two people who go to the odd movie together are not a de facto couple, but what about if they spend four nights a week together? Or five nights? Or six?

Second, when does the clock start to tick? You can only know when three years is up if you know when the relationship started and that start date may be uncertain and/or unrecorded.

How do you judge that dating has become a relationship and that the Property (Relationships) Act now applies?

There is often a lot of money at stake. And it is not just important for the couple themselves. Should the parents and grandparents change their wills because Susan brings her “flatmate” home for Christmas?

In this area, the law can be difficult. To decide whether a couple is a “couple,” a judge will consider a wide range of factors including whether you live together, your commitment to each other, the extent to which finances are merged, care of any children, performing household chores, whether there are sexual relations, whether others see you as a couple, the length of the relationship, sharing a home and how property is owned and used.

None of these factors is a make or break. One or more could be missing and a court could still judge that a couple was a “couple,” with the result that assets and liabilities would be shared.

This is an area where legal advice and a properly executed contracting out agreement (previously called a pre-nuptial agreement) are essential.

Make an agreement early: it is far better done while you are still in love than in those bitter end-times.

Hard though it may be, a contracting out agreement takes uncertainty out of the relationship. Relationship property cases are poisonous, life-wrecking misery – to be avoided at all cost.

Martin Hawes is the Chair of the Summer KiwiSaver Investment Committee. He is an Authorised Financial Adviser and a disclosure statement is available on request and free of charge, or can be found at www.martinhawes.com.

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