Clean Break or Messy Split? Your Most Common Questions Answered

Disclaimer: Yes, Clean Break is a law firm, but we are not your lawyers and this article does not create a lawyer-client relationship. Clean Break is only qualified to give New Zealand advice. This article is general legal information and should not be seen as legal advice as everyone’s circumstances are different. You should talk to a lawyer before you rely on this information.

Navigating the complexities of relationship property and separations can be overwhelming, especially when emotions are running high. Whether you’re thinking about separating, or in the thick of it, at Clean Break we recognise information is power.

Relationship property includes the family home, vehicles, furniture and any income earnt during the relationship. It also includes businesses started during the relationship and increases to KiwiSaver accounts.

Separate property is property that one partner owned before the relationship began, inheritances, gifts specifically to one partner, and property deemed separate under a contracting out agreement. However, separate property can become relationship property under certain conditions, such as if it is used for the benefit of you both. A common example of this is the family home – even if you owned this well before your relationship started, it will be relationship property unless you have a valid contracting out agreement preventing this.

Relationship property is generally divided equally between partners if the relationship has lasted three years or more. There are exceptions to this though.

Separate property can become relationship property if it is mixed with relationship property or used for the benefit of both partners. For example, if a gift or inheritance is used to buy the family home or to repay a mortgage, it usually loses its separate property status.

On separation, you and your ex will need to decide who will live in the house, while all of your property stuff is resolved (which typically takes months). Some couples remain living together during this time – but don’t underestimate how difficult this is.

What is best practice depends on who you are talking to. Counsellors typically recommend that you move out if your ex is not willing to, for your mental health. Lawyers generally recommend you stay in the house until all assets are divided, even if there is tension, as it tends to keep the process moving a bit faster as your ex has an incentive to get things resolved! You are best placed to make this decision for yourself, but we do recommend engaging a lawyer before deciding to move out – especially if custody of children has not been agreed.

Usually, separated couples agree that one person will “buy” the other out of the family home – especially if there are young children. If finances prevent this, the family home is usually sold. If an agreement has not been reached before the house is sold – all of the proceeds of sale will be kept safe from you both in a lawyer’s trust account.

The family home is almost always considered relationship property and is usually divided equally between the partners, regardless of whose name is on the title or how it was acquired.

Debts incurred for the benefit of the relationship (e.g., mortgage, car loans) are considered relationship debts and are divided equally. Personal debts (e.g. student loans, pre-existing debt) remain the responsibility of the person who incurred them, unless they benefited the relationship.

Yes, inheritances can be protected as separate property if they are kept separate from relationship property, such as being held in a separate account in the person’s own name. However, if the inheritance is used to benefit both partners, or cannot be easily traced, it may become relationship property. If you are concerned about protecting your inheritance, a consultation with a lawyer is a good investment.

KiwiSaver funds accumulated during the relationship are considered relationship property and are typically divided equally. Typically, the partner with the lower KiwiSaver might keep more of the other assets (the house, cars, boat etc), and the lawyers just do a wash-up to make sure that the ultimate division is fair. That way – KiwiSaver funds remain intact.

Sometimes there is insufficient cash to do this. In those circumstances, you and your ex can make an application to the Family Court to have part of the KiwiSaver paid to them or you. This is an extra step (so more cost), but the Court typically makes these orders (relatively) quickly without any need for a hearing.

Figuring out the value of bank accounts, KiwiSaver policies and term deposits are easy – lawyers (and the Court) just look at the balance on the separation date.

For more physical assets (like the house, furniture cars, business etc) – the important value is the current market value of the asset. Professional valuations are usually required for these – but on the basis of how much you would get if you sold the asset, not how much it would cost to replace it!

Engage a specialist relationship property lawyer early, gather all relevant financial documents, and ensure full disclosure from both you and your ex. We have written a comprehensive guide on the process you will follow to get a Clean Break.

If you want your agreement to be final (binding, enforceable), then yes you unfortunately do need a lawyer. Otherwise you run the risk that your ex could change their mind and lawyer up 5, 10, 15 years later. It’s possible and it does happen.

You can (and should) talk to your lawyer about anything you are concerned or hesitant about. If cost, ask them for an estimate or even better – a fixed fee. If you are worried that they might aggravate things, ask to approve everything that is sent to your ex’s lawyer. These aren’t unreasonable requests and will help you feel more in control of the process.

The time can vary widely, from a few months to several years, depending on the complexity of the assets and whether the parties can agree or if Court is required. There is also a shortage of relationship property lawyers in New Zealand, so sometimes it isn’t your ex, but their lawyer’s workload, holding things up.

Yes, a business can remain separate property if it was established before the relationship and not used for the benefit of both partners. However, any increase in value during the relationship might be considered relationship property. If you want to keep your business separate, the best way to do this is get a contracting out agreement sorted through good relationship property lawyers (you will need one each).

If your ex refuses to disclose assets, your lawyer can apply to the Family Court to make orders requiring your ex to provide disclosure. Sometimes, your lawyer will suggest by-passing your ex and getting orders compelling third parties (e.g. a bank) to provide disclosure.

Pets are considered chattels under New Zealand law, meaning they are treated as relationship property and meant to be divided “equally”. In practice, typically the partner with the stronger attachment to the pet will take ownership, sometimes with an agreement for shared care or compensation.

If you suspect your ex is hiding assets, tell your lawyer ASAP. They can request financial records and, if necessary, involve forensic accountants and investigators to uncover hidden assets. They may also give you practical tips on how to uncover hidden assets – unfortunately this is reasonably common so lawyers have gotten good at detecting and undercovering this sort of yuck behaviour.

Economic disparity is a legal concept that typically arises when one partner is financially disadvantaged by the separation, due to sacrifices made during the relationship (e.g., giving up a career to raise children).

If there is an economic disparity, a 50/50 division would quickly feel unfair to the lower earning spouse. After three years, a million dollar division ($500,000 each) can turn into $750,000 or more for the higher earning spouse, and $400,000 for the lower earning spouse.

The legislation allows for the person disadvantaged by the economic disparity to receive more than 50% of relationship property. Calculating this compensation is not straight forward, so it is important that if there is a possibility of an economic disparity claim, that both parties get advice from experienced relationship property specialists.

A relationship property agreement is a legal document that outlines how assets will be divided between partners. To be binding, two independent lawyers (one each) need to certify they have given the right advice under the legislation.

If you have signed a relationship property agreement and discovered later that it was a very bad deal, you do have options. After these agreements are signed and certified, they can be changed by further agreement or by the Family Court. You should contact an experienced relationship property lawyer to discuss your options.

A contracting out agreement (also known as a “pre-nup”, prenuptial agreement or section 21 agreement) allows couples to define for themselves how their property will be divided in case of separation. So long as the agreement remains fair, it will apply rather than the default rules of the Property (Relationships) Act 1976. To be enforceable, contracting out agreements typically need to be completed through two independent lawyers (one per person).

Sometimes discussing things directly isn’t getting anywhere. Most of the time, even when you might be at loggerheads, your lawyers are able to overcome disagreements. They sometimes will recommend alternative dispute resolution methods, like mediation. If they aren’t convinced that the disagreement will be sorted in a reasonably efficient way, your lawyer may recommend filing proceedings in the Family Court. Then, if you cannot agree, a Judge will order what they think will be a fair outcome.

If your ex thinks the sale of the house is necessary, but you disagree, they can file proceedings in the Family Court and a Judge will decide. Typically the Court likes to see outcomes that allow people to retain living in the family home, if that is what you want and you can afford to buy your partner out. Good lawyers can give you a kind reality check though – as if you can’t afford to buy your partner out, you probably can’t afford Family Court proceedings either.

The portion of superannuation and life insurance policies that accrued during the relationship is considered relationship property and is typically divided equally. If this isn’t easy to calculate, your lawyer will recommend an actuary be engaged to value what is relationship property and what is separate property.

In New Zealand, most modern life insurance policies only pay out on death – not cancellation. However it is always good to check policy wording.

Debts incurred after separation are generally considered personal debts unless they were for the benefit of both partners. Each partner is responsible for their own post-separation debts.

Yes, all property can become relationship property, even if one partner owned it before the relationship.

An affair or adultery does not typically affect property division, as New Zealand has no fault divorce legislation. The law simply cares whether there was a relationship, that it has now ended, and what assets and liabilities existed when the relationship ended.

The court will consider various factors, such as the needs of children and how compensation will be paid to the other partner, before deciding whether one partner can keep the family home or if it should be sold.

A relationship property lawyer makes sure you have all of the information you need to achieve a Clean Break – a binding and enforceable agreement that fully settles all of your property with your ex – so you both can move on.

Yes, couples can agree to divide their property any way they like, as long as both parties receive independent legal advice and the agreement is properly documented through lawyers. If the agreement you are wanting to make feels unfair, you should be aware that your lawyer could be hesitant to provide you a certificate – so it is best to discuss this sort of thing early to save you having to incur extra legal fees.

The court considers all contributions to relationships equally. So, this covers both financial and non-financial contributions, such as homemaking, childcare, and support for the other partner’s career. In practice, for shorter relationships, non-financial contributions have slightly less weight if there is a large financial contribution imbalance.

Engage an experienced relationship property lawyer. If you are already in a relationship, they can discuss whether a contracting out agreement is suitable for you. If you have already separated, expert advice can minimise the damage a relationship does to your assets by maximising your claims under the law.

You can’t force your ex to sign, and if you did, the agreement would be open to challenge. If your ex is refusing to sign an agreement, we recommend discussing the reasons why with your lawyer to explore whether a solution can be found. If you are simply at an impasse, you will need to file proceedings in the Family Court.

Cars, boats, jetskis, trailers, motorbikes and other things on wheels are considered relationship property if they were acquired during the relationship or were used for the benefit of both partners. They are typically valued at their market value at the time of separation and included in the overall property pool to be divided. The division can involve one partner keeping the vehicle and compensating the other, or selling the vehicle and splitting the proceeds.

In New Zealand, getting relationship property into your own name typically does not trigger immediate tax issues, but tax obligations can arise later when you go to sell the asset. To understand this more, it’s important to consult with an accountant before you sign a relationship property agreement. The IRD also has some helpful information on this topic.

Overseas property is classified as either “movable” (e.g., bank accounts, shares) or “immovable” (e.g., real estate). New Zealand courts can make orders about movable overseas assets but generally cannot make orders about immovable property unless the couple agrees that New Zealand law should apply. If there is no agreement, the law of the country where the property is located will usually apply.

To prove that certain assets are separate property, you will need clear documentation, such as records showing the asset was acquired before the relationship or was a gift or inheritance. Keeping these assets separate from joint property (e.g., in a separate bank account) also helps to maintain their status as separate property. You will need to show it has never lost it’s separate property “character” by getting mixed up with relationship property.

Debts from a previous relationship are generally not considered in the division of relationship property unless they were incurred for the benefit of the current relationship. Personal debts, such as student loans or credit card debt from before the relationship, typically remain the responsibility of the person who incurred them.

In New Zealand, de facto relationships (couples living together but not married) are treated the same as marriages under the Property (Relationships) Act 1976, if the relationship has lasted for three years or more.

If you disagree with the property valuation, your lawyer may suggest a second opinion from an registered valuer is obtained. That can sometimes assist in negotiations in order to achieve a fairer price.

Even if one partner contributed more financially, the Property (Relationships) Act requires that all contributions, including non-financial ones like childcare or homemaking, are considered equal. However, the court may take financial contributions into account when deciding on an unequal division in shorter relationships, or where there has been extraordinary circumstances that would make equal sharing grossly unjust. We note that it is reasonably common for one partner to bring a family home into the relationship – so if that is your situation – it may not be sufficient to be an “extraordinary” circumstance.

In de facto relationships of less than three years, the property division rules are different. The Court can only make an order if it is in the interests of justice AND there are either children of the relationship (i.e. a child living with the couple, the child doesn’t need to be biological) or someone has made a significant (usually financial) contribution.

When these circumstances apply, instead of an equal split, property is divided based on each partner’s contributions to the relationship, both financial and non-financial (although typically financial carries more weight in the early stages).

Shared accounts and joint credit cards are considered relationship property. During separation, these accounts should be closed or separated to prevent further joint liability – however it is best to take legal advice to confirm this is best for you before you take any steps like this. The balances are typically included in the division of relationship property.

If you live in the family home after the break up, but your ex is paying the ownership expenses (like mortgage, rates, insurance, maintenance etc), your ex may be able to claim “occupation rent” from you. This usually works out to be 1/2 the market rent of your house – so if you could to rent your place for $800 per week, your ex could potentially claim $400 per week from you, until all of the relationship property is sorted.

This is a really tricky claim to both make or defend, so we recommend getting specialist relationship property advice before even thinking about a claim like this. There are a bunch of things the Court looks at when deciding whether to accept a claim of occupation rent – it is not an easy claim!