The Ex-Files: What happens to overseas assets in a separation?

Overseas assets are classified as either "movable" or "immovable" property. The general rule is that the New Zealand Courts do not have jurisdiction to deal with immovable property that is not in New Zealand. Photo / 123RF

COMMENT:

Q. My husband and I are separating after seven years together and we are in the process of splitting our assets. We met in the UK and moved to NZ about four years ago to get married and settle down. We own a house in NZ with a large mortgage. My husband also has a flat in London which he bought soon after we met, as well as a UK pension and bank account, all in his name.

He told me that he isn't legally obligated to share any of the overseas assets with me. I thought all our assets had to be split 50:50.

I have lived in the flat in London and think of it as mine too. I helped with the renovating, decorating and managing it once we started renting it out, so it would be unfair if I couldn't share in it. Is what he is saying correct?

A. Dividing assets under New Zealand law

In New Zealand, the Property (Relationships) Act 1976 governs how assets are divided in a separation. The Act dictates that once you have been together for three years, your assets and debts become "relationship property" which are divided equally between you if you separate. This includes assets like property, bank account balances, superannuation, cars and furniture.

There are some assets which remain "separate property" and don't need to be shared. These include money in bank accounts which existed prior to the relationship, and that are kept separate from the relationship and do not contain income earned during the relationship. They also include any portion of superannuation (including Kiwisaver) which is acquired prior to the relationship.

Overseas Property

Only some property held overseas is covered by NZ law.

Within the Act, overseas assets are classified as either "movable" or "immovable" property. Movable property includes superannuation, vehicles and bank accounts. Immoveable property includes land (with or without a building), fixtures and leasehold interests in land.

The general rule is that the New Zealand Courts do not have jurisdiction to deal with immovable property that is not in New Zealand.

The only exception is where a couple agrees in writing that New Zealand law should apply. Such an agreement needs to comply with the rules and formalities of the other country's laws.

Your situation

Your husband's flat in London is immovable property and therefore is not covered by New Zealand law. Ownership of the flat will be dependent on the relationship property laws of the United Kingdom.

However, his bank account is moveable property and is therefore covered by New Zealand law. You may be entitled to a share of this – unless the funds were accumulated before your relationship began and have been kept separate from any income earned during your relationship.

The superannuation is also classified as movable property. The portion that has accumulated since your relationship began is relationship property and will need to be shared equally with you.

Next steps

New Zealand Courts can make orders regarding the division of the movable property. However, I always recommend that people try and reach agreement out of Court if they can, as going to Court can be expensive, stressful and take a long time to reach a conclusion.

Since your situation is somewhat complicated, I would advise you to seek legal advice from a New Zealand lawyer. Provide them with as much information as you can about the assets belonging to you and your husband, both here and overseas. You may also wish to seek advice from a lawyer in the UK.

Then I recommend that you and your husband try to reach agreement on your relationship property. You can do this through discussion between the two of you, or in a round table meeting with your lawyers.

Summary

When your relationship property includes overseas assets, you need to be aware that New Zealand law may not govern how these are split in a separation. If you want to be sure that you have an equal share, you either need to have a prenuptial agreement in place, or have a formal legal agreement with your spouse or partner that New Zealand laws will apply to your relationship property if you separate.

Do you have a family law question? Email it to js@bastionchambers.co.nz. Questions should not exceed 200 words. Please provide a phone number. Your name will not be published. Jeremy cannot answer all questions, correspond directly with readers, or give legal advice. Jeremy's advice is of a general nature, and he is not responsible for any loss that any reader may suffer from following it.

• Jeremy Sutton is a senior family lawyer, specialising in divorce cases where there are significant assets, including family trusts and complex business structures.