Liz Koh: Finances can cause splitting headache

Finance management can be very stressful.

Statistics show that at least a third of marriages and de facto relationships fail. Being aware of the financial consequences of the end of a relationship means you can put in place strategies to protect the property you acquired before the relationship and protect your rights to a share of property acquired during the relationship.

Under the law, there is a general rule, with few exceptions, that if a couple are deemed to be living together for at least three years, there is an equal division of relationship property if the relationship ends.

Relationship property includes the family home, even if the family home was acquired before the start of the relationship, as well as other family chattels such as boats and cars or even pets. It can also include superannuation accumulated since the start of the relationship. Separate property, which remains the property of the individual, includes businesses or investments acquired prior to the relationship, gifts and inheritances held separately.

Relationships sometimes end through a death. The surviving partner can choose between the provisions of the will and a relationship property claim. This is particularly important to note when it comes to second relationships.

A surviving partner may be entitled to half the value of relationship property which could be significantly more than what was provided for under the will.

Trusts and "contracting out agreements" are often put in place at the start of a relationship to establish a fair means of dividing property on separation or death. It is important to review these arrangements during the course of a relationship, because while they might be fair at the start, they may become unfair as the relationship matures.

Sound independent legal advice is required, particularly if you have significant personal assets or if you are in a second relationship.

Liz Koh is an Authorised Financial Adviser. The advice given here is general and does not constitute specific advice to any person. A disclosure statement can be obtained free of charge by calling 0800 273 847. For free eBooks, go to www.moneymax.co.nz and www.moneymaxcoach.com