Month: June 2023

Following a relationship breakdown, the term “relationship property” becomes all important.  But what exactly does relationship property include?  In a series of articles, we will be considering this question in respect of the most common items of property that people hold in their relationships, starting with KiwiSaver.

After the family home, KiwiSaver can be one of the major assets of a relationship.  So, is KiwiSaver relationship property?  As for most property, the answer is going to be “it depends”.

When is KiwiSaver Separate Property?

We will first address when KiwiSaver is not relationship property.  That is, when it is considered to be the separate property of one of the parties.  This will cover before, during and after the relationship.

It is not uncommon for one or both of the parties to enter into a relationship with a significant balance in a KiwiSaver fund.  This is particularly so in subsequent relationships.

The starting point for the KiwiSaver balance that you enter your relationship with is that it is your separate property.  However, if you were to subsequently use your KiwiSaver for the purchase of your first home, which you then live in with your partner, it is most likely that this contribution will become relationship property.  Likewise, if you make a KiwiSaver withdrawal due to hardship and apply it to the relationship, then this too will be considered relationship property.

During your relationship you may make contributions to your KiwiSaver from separate property.  If these contributions are in fact made from separate property (for example if you received an inheritance and invested that in your KiwiSaver fund), then these contributions will remain your separate property, provided your KiwiSaver is not subsequently used as described in the preceding paragraph.

Following separation, any contributions that you make to your KiwiSaver fund from your separate income or from your separate property, will remain your separate property.

When is KiwiSaver Relationship Property?

Any contributions that you make to your KiwiSaver during your relationship, that are not made from separate property, are most likely going to be relationship property.

The majority of KiwiSaver contributions come directly from employment, rather than voluntary contributions from other sources.  Considering the income earned during a relationship is usually relationship property, in most cases, a KiwiSaver balance accumulated during a relationship is considered relationship property.

If My KiwiSaver is Relationship Property What Happens to it if My Relationship Ends?

The starting point for any part of your KiwiSaver that is relationship property is that it is divided in half, as with all your other relationship property.

Practically speaking however this does not necessarily mean that you must access the funds in your KiwiSaver.

In circumstances where each party has a KiwiSaver fund then they may each keep their respective funds, with an adjustment payment being made from other relationship property to ensure overall equality, if the KiwiSaver balances are not equal.  This approach can also be used where only one party has KiwiSaver.  This is of course dependent on the availability of other relationship property to make an adjustment payment from.

If there is no ability to make an adjustment payment, then the Court can make an order for KiwiSaver funds to be released.

How Can I Protect My KiwiSaver?

One way to protect your KiwiSaver is by entering into a contracting out agreement with your partner pursuant to the Property (Relationships) Act 1976, often referred to as a “pre-nup” or “pre-nuptial agreement”.  This will specify whether any pre-relationship balances remain separate, and how on-going contributions will be treated upon separation.

The experienced team at McCaw Lewis can help you navigate any aspect of your relationship property matters and answer any questions you may have.

Zane is an Associate in our Dispute Resolution Team, specialising in Relationship Property, and can be contacted on 07 958 7431.

The loss of a family member or an acquaintance can be one of the most difficult situations to face.  A surprise as to how the deceased has left their affairs, can often compound the stress and emotions being experienced.

While the law assumes that a validly executed Will reflects the testator’s (willmaker’s) intentions, there are a number of legal frameworks to protect both the testator and those left behind.  When working with a client who is faced with an unexpected situation under a Will, we consider each of these in assessing whether or not the Will could or should be challenged.

Capacity – Did they know what they were doing?

Testamentary capacity has both a medical and a legal element to it.  In general terms, the Court must be satisfied that the testator understood what they were doing, and the consequences of it.

In assessing such a claim, it will be important to obtain full medical records and to take appropriate expert advice as to any impairments the testator may have had at the point of executing the Will.

Undue Influence – Were they pressured?

A testator can be found to have been subject to undue influence, if they were pressured or coerced into signing a Will contrary to what they wanted.

A duress situation is more likely to occur when a Will is not executed with the assistance of a lawyer and/or is not witnessed by a lawyer, though pressure can also have been exerted when a lawyer has been involved.

Duress is a high threshold, and a Court needs to be satisfied that the Will does not reflect the testator’s real wishes and own free will.

If there are issues of capacity, there is also greater risk of duress being imposed on a testator.

Testamentary Promise – Why didn’t they do what they said they said they would?

A testamentary promise claim addresses a situation when someone has provided services/assistance to the deceased based on an express or implied promise that they would be provided for in the Will.

Such claims often arise from people outside of family, as normal familial duties will seldom meet the testamentary promise test.

When assessing what reasonable compensation is for the service provided by the claimant, the Court will take into account a range of factors.

Family Protection Act – But what about family?

Family Protection Act claims are the most common basis to challenge a Will.  Most immediate family members have standing to bring such a claim, which will be on the basis that the testator has failed to meet the moral duty owed to them.

While there is an argument that someone should be able to leave their estate to whoever they wish, the law has a framework to ensure the deceased has considered the moral duties which the law imposes.

Where a moral duty has been breached, a Court can only amend the Will to the extent necessary to remedy the breach.  Doing so requires the Court to take into account factors including the financial needs of the claimant, the size of the estate and competing moral duties.

What Happens if a Claim is Successful?

Different claims can result in different outcomes.  If a Court finds that there was a lack of capacity or duress, the outcome is that the Will in question can be declared void.  This could result in an earlier valid Will coming into effect, or if there is no other valid Will, default intestate distributions will be made.

Conversely, in the case of a successful Family Protection Act claim or testamentary promises claim, the position under the Will will only be varied to the extent necessary to address the problem.

Summary

Managing estate claims requires careful assessment of the options and the wider considerations such as family dynamics and relationships.  There are statutory timeframes which apply so it is important that concerns are raised as soon as possible.

In nearly all situations, a negotiated outcome will minimise the stress and long-term damage which can result from litigating such matters.

Daniel leads our Dispute Resolution Team, specialising in Trust and Estate Disputes, and can be contacted on 07 958 7477.