Wellington + 64 4 496 9990
Lower Hutt + 64 4 569 4873
Masterton + 64 6 370 6480

Relationship property after death

 

Part 8 of the Property (Relationships) Act 1976 (‘the Act’) deals with the division of property where a marriage, civil union or de facto relationship ends (after 1 February 2002) because one (or both) of the parties has died.

The basic scheme of the Act for relationships ending on death is that surviving spouses, civil union or de facto partners (“survivor”)  have a choice between two options: Options A and B, outlined as follows.

Option A

Under Option A, the survivor makes a choice to apply for a division of the relationship property based on the equal sharing regime under the Act.  By choosing this option, the survivor cannot take property by survivorship, what is given to them in their deceased partners’ Will or under the intestacy rules.

Option B

Under Option B, the survivor takes all of their own property, together with jointly owned property by survivorship, and also takes whatever is given to them under the deceased’s Will or under intestacy provisions. Basically, by choosing this option, the survivor chooses not to apply for a division of the relationship property under the Act.

The Options Generally

The personal representative does have a right to make an election.

Choosing one of the options is a formal process that must be made by completing and signing a written notice. The notice must include or be accompanied by a certificate signed by a lawyer certifying that the lawyer has explained the effect and implications of the option chosen. It also needs to be lodged with the executor or administrator of the estate.

There are also important time limits that apply to the election of an option. Where the estate is small enough not to require a grant of probate or letters of administration, the choice must be made within six months of the date of death. If probate or letters of administration of the estate is granted within that period, then within six months of the grant of probate or letters of administration. In all other cases, it is within six months of the grant of probate or letters of administration. The time limit is important because the executor/administrator of the estate may distribute the estate if no election has been made within the six month period, and once distributed it cannot be undone.

If Option A is chosen, there is also a time-frame for the filing of the proceedings in court.

There is one important distinction between spouses (under a marriage and civil union) and de facto partners in regard to the choice of options. Spouses have the right to choose Option A irrespective of the duration of the relationship, whereas de facto partners have that right only if their relationship lasted for three years or more—unless the court is satisfied that there was a child of the de facto relationship or the surviving de facto partner made a substantial contribution to the de facto relationship, and not having Option A would result in substantial injustice.

Option B is the default position if the survivor does not choose Option A within the time limit as detailed above, and in the manner prescribed.  Simply put, if the survivor fails to make an election within the time limit, then they are treated as having chosen option B.

Summary

The election of Option A or B may result in vastly different outcomes and therefore it is crucial that you obtain proper legal advice about this election and the time-frames that apply to this election.