A vehicle can be registered in one person’s name only but that doesn't mean it's yours alone. Photo / Supplied
A vehicle can be registered in one person’s name only but that doesn't mean it's yours alone. Photo / Supplied
OPINION:
Q: I have been in a relationship for four years. My partner wants to change careers and will need to return to university for further study. She will take out a student loan to meet the cost of her university fees. If we separate would this loan be classifiedas her debt, or a joint debt?
Also, my son from a previous relationship wants me to buy him a Tesla. He is in a serious relationship, and I think he wants to buy it in his and his partner’s name. Do you have any advice about this?
Your partner’s student loan
If your partner’s student loan is considered a relationship debt under the legislation, you will be required to meet half the amount owing if you separate.
Put simply, a relationship debt is a debt that has been taken out to benefit the household/relationship. This is assessed on a case-by-case basis and can include things like incurring debt to acquire relationship property, run the household or raise children. With a student loan, a court would consider whether the qualification was obtained for the benefit of the household/relationship or for the benefit of an individual.
It’s possible for part of a student loan to be a relationship debt. For example, if your partner drew down the Student Allowance, and these funds were used to meet day-to-day household expenses such as an electricity bill or groceries, then this portion of the loan would be classified as relationship debt and divided equally. The balance would be separate debt and paid by the person who took out the loan on separation.
Student debt can be relationship property depending on the circumstances. Photo / 123rf
To clarify, a student loan taken out for study that took place before a relationship begins will not be a relationship debt. However, a student loan taken out during a de facto relationship or marriage (as in your case) has the potential to be classified as a relationship debt.
To protect yourself, you should discuss the loan with your partner and agree who will be responsible for the loan if you separate. You should also seek legal advice about recording the agreement in a Contracting Out Agreement.
A Contracting Out Agreement allows you to opt out of the relationship property legislation. You and your partner will both need to obtain independent legal advice before signing the agreement.
Your son’s Tesla
Waka Kotahi the New Zealand Transport Agency will not allow the Tesla to be recorded as joint property of your son and his partner; vehicles can be registered in one person’s name only. However, this would not prevent your son’s partner from making a relationship property claim to the vehicle if they separated.
Although gifted assets are separate property under the legislation, they can be converted to relationship property. If your son and his partner both use the Tesla, it would likely be regarded as a family chattel and therefore relationship property once they have been in a de facto relationship for three years.
Even if your son used the vehicle exclusively, there would still be the potential for the Tesla to be a family chattel. Although the legislation requires that a vehicle be used principally for “family purposes”, my experience is that lawyers and the Family Court tend to take a wide view of the definition of family chattels. For example, a vehicle used exclusively by the husband in one case was found to be a family chattel because it freed up the use of another vehicle for the wife.
Again, if your son wishes to protect the Tesla as his separate property, he should seek legal advice about entering into a Contracting Out Agreement with his partner. You could also potentially retain ownership of the car in your name and just permit your son to use it.
• Jeremy Sutton is a senior family lawyer, specialising in divorce cases where there are significant assets, including family trusts and complex business structures.
