Dream Retirement Shattered By Relationship Property Laws
It can often be difficult to tell whether you’re in a qualifying relationship that might trigger the equal sharing provisions of our relationship property laws. Many enter into new relationships, thinking their relationship is more of a close friendship, rather than something akin to marriage. The trouble is, should that relationship end, the other person (and/or their family) doesn’t always agree. Assets you own (even if they’re in your sole name) could be subject to a claim which can have a serious financial impact on retirement plans.
A local example (names & facts changed to protect privacy):
Clementine (aged 64) moved to Christchurch from France following the end of her marriage. She brought with her enough money to purchase a lovely freehold home ($600,000.00), a car ($40,000.00) and a caravan ($90,000.00). After a year or so she met Jack (aged 60). Jack didn’t own much after his divorce, but he was a great companion. After the earthquakes Jack’s flat was too cold so he moved in to live with Clementine and over the next few years they enjoyed many trips around NZ together. Clementine paid for their travel and living costs as Jack usually spent all his income on his children and hobbies.
After 5 years together, Clementine and Jack separated. Clementine felt their relationship was nothing like a marriage, just close friends enjoying their retirement. Jack’s kids however were adamant they were a couple and Jack wasn’t going to argue.
Clementine’s dream retirement now involved lawyers, the Family Court and Jack making a claim against her for half her home, car and caravan! Where on Earth would she get $365,000.00 from?! Her small income and age meant the bank wouldn’t give her a mortgage!
How could Clementine have avoided this claim? By entering into a Contracting Out Agreement with Jack. That Agreement could have secured as her separate property all the assets in her sole name and ensured Jack would only have been entitled to share jointly owned property.
At Harmans we have a specialist Family Law Team who can assist with Contracting Out Agreements and discuss any relationship property questions you may have. Give Harmans a call on 352 2293.