Are you in a de facto relationship?

If so, why does it matter?

Understanding what a de facto relationship is, and whether you are actually in one, can be confusing. However, it is essential to understand the parameters of these sorts of relationships if property needs to be divided when a couple separates.   

Under the Property (Relationships) Act 1976 (PRA) a de facto relationship is a relationship between two persons (regardless of sex, sexual orientation or gender identity) over the age of 18 who “live together as a couple”.

But what exactly does it mean to “live together as a couple”?

The PRA sets out a number of relevant – and diverse – factors when considering whether two people are living together as a couple, including the duration of the relationship, the performance of household duties, and whether or not a sexual relationship exists.

Other key factors are:

• the degree of financial dependence or interdependence, and any arrangements for financial support, between the parties
• the ownership, use, and acquisition of property
• the degree of mutual commitment to a shared life
• the care and support of children
• the nature and extent of common residence
• the reputation and public aspects of the relationship

However, no one factor is determinative, so whether or not you are in a de facto relationship will depend on your particular circumstances.

Why does it matter if I’m in a de facto relationship?

Knowing whether you are in a de facto relationship, and key information such as when that relationship commenced, is important as it determines how your property is divided at the end of your relationship.

Generally speaking, once you have been in a de facto relationship for three years or longer, any “relationship property” is shared equally. This includes the family home (the principal family residence), even if one of the parties owned it prior to the relationship, family chattels (including vehicles), and all property you have acquired after the relationship began including income.

Therefore, whether you are in a de facto relationship, and when that commenced, can affect what you might need to share with your partner if you were to separate.

For example, knowing when your de facto relationship commenced determines whether the shares acquired from your income are relationship property (and shared equally) or separate property (and retained by you).

If a couple is in a qualifying de facto relationship anything acquired from income (e.g. shares, KiwiSaver increases, savings in bank accounts even in personal names) will be relationship property. Often people don't realise this and think because the asset is in their sole name it remains theirs on separation.

We recommend getting advice if you are in a relationship (or considering entering into one) and want to understand how your property rights may be affected if you were to separate.

Entering into a contracting out agreement (or “pre-nup”) should be considered if you do not want the usual rules to apply under the PRA.

For expert advice on relationship property and family law matters please contact Kristina Dunne on @email or 09 985 2520.