Property split changes proposed

Significant changes to the way relationship property is dealt with when a couple separates have been proposed by the Law Commission.

The commission has published proposals to reform the Property (Relationships) Act, setting out the rules for dividing property when a relationship disintegrates.

Last year, the commission published an issues paper and invited comment. It has now published a preferred approach paper, asking for feedback.

It suggests that the family home should no longer always be shared 50:50. If one partner owned the house before the relationship began, only the rise in value during the relationship should be shared. Homes bought during the relationship would still be shared equally.

People who had children, had been together for 10 years or more, or who had built or sacrificed careers because of the relationship should be eligible for family income-sharing arrangements or ‘‘FISAs’’, the commission’s paper said.

‘‘Under a FISA, the partners would be required to share their combined income for a limited period after they separate.’’

That would depend on how long the couple were together, to a maximum of five years.

It also said a court should have greater powers to share trust property that was produced, preserved or enhanced by the relationship.

‘‘The rules should continue to apply to all marriages, civil unions and de facto relationships lasting three years, unless the partners enter into a contracting-out agreement. Partners should still be entitled to share equally in all relationship property, subject to limited exceptions.’’

The commission said children’s best interests should be given higher priority, including giving the primary caregiver of children a default right to stay in the family home in the period immediately following separation.

‘‘Dividing property when relationships end is often a challenging task, and one which typically comes at a time of emotional upheaval. Partners should be helped at this time by a law that is clear and that accords with what most New Zealanders would think is fair,’’ commissioner Helen McQueen said.

She said people often talked about wanting a ‘‘clean break’’ but that was not possible in situations where there were children involved or where one partner had made significant sacrifices for the good of the relationship.

‘‘You can’t have a clean break at the expense of fairness.’’

Efforts to allow courts to allocate an uneven distribution of property to address disparity had not succeeded, she said.

‘‘It’s a disaster – it takes far too long, it’s uncertain and the costs involved are significant.’’

Consultation is open for six weeks before the commission prepares its final report.