Who will get the dog if I get a divorce?
Q: Things have been rocky with my fiance and I’m not certain that we’ll stay together. I’ve just inherited around $350,000 which I could use to pay off some of our mortgage but if we separate, would I get to keep this? How would the rest of our assets be divided? My other concern is our dog. I can’t imagine him not living with me.
A: The answer to your inheritance question is no. If you pay off some of the mortgage with your inheritance, the amount becomes your joint relationship property. However, it is possible to make sure this stays your separate property if you split up. Your dog is part of your relationship property, and is owned equally by you both. You will need to work out an agreement regarding who will own him if you separate.
Relationship property
Assets you own together are your relationship property. Generally, when a couple separates, relationship property is divided equally unless there is a legal agreement that says otherwise. On that list are:
● the family home
● vehicles
● holiday homes
● investments
● retirement funds earned during the relationship
● furniture and other chattels
● bank accounts, if the funds in the account have been earned during the relationship, even if the accounts are in separate names
● debts incurred during the relationship
● loyalty programmes like Airpoints, Hotpoints and Fly Buys
● iTunes
● family pets
Often in a separation, you will need external valuations for bigger items such as property, investments
and cars.
Family pets
Family pets are considered a “family chattel” and part of relationship property and subject to the equal sharing rule in a separation. Custody of your dog would form part of your relationship property negotiations. In some circumstances, much-loved pets can continue to be jointly owned, and have scheduled time with both parties. If you can’t come to an agreement on elements of your relationship property, including your dog, then you can end up with a family court hearing.
Separate property
There are some types of property classed as separate, which means one partner alone has legal entitlement to the asset. This includes inheritances. But separate property can become jointly owned when it is intermingled with relationship property.
If you used your inheritance to pay down the mortgage the money would be classed as intermingled and becomes relationship property. This means you would need to halve it with your partner if you separated.
Using inheritance to reduce the mortgage
If you want to pay down some of the mortgage, reach agreement with your partner as to how all your assets will be divided if you split up, including the fact you want to retain sole ownership of your inheritance. Get a lawyer to document what you both agree to in a Contracting Out Agreement (COA). This governs how your property will be divided if you separate. Without a COA in place, the Property (Relationships) Act dictates what you are legally entitled to in a separation.
It is not sufficient for you and your partner to agree this between yourselves, even if it’s in writing.
Keeping the inheritance separate
You may need this inheritance money to be untouched during the relationship. The alternative is to invest or bank the money in your name, in specific accounts that are separate from any accounts used by you or your partner. There are a few other types of property which are considered separate and not divisible in a separation:
● bank accounts which existed prior to the relationship that are separate and do not contain income earned during the relationship
● the portion of retirement funds you amassed prior to the relationship
● gifts for the sole use of the recipient, such as jewellery
● family heirlooms and taonga
● debts incurred before the relationship
Summary
Any property acquired while you are together in a recognised relationship, no matter how big or small, is jointly owned. Think carefully about your inheritance (and your dog). What you do with the money will determine if it stays yours or becomes partly theirs.
Jeremy Sutton is a senior family lawyer, specialising in divorce cases where there are significant assets, including family trusts and complex business structures.