Love and money: What you need to know about de facto relationships

Last updated 17 April 2023

Love is blind but that doesn’t mean your money should be. When you’re getting into a long-term relationship, you need to make sure you’re protected, no matter what happens. 

Kiwis can get a bit squeamish when it comes to talking about money, and many of us get into long-term relationships without having had the money talk with our partner. You don’t need to have identical attitudes about money but you do need to be on the same page in terms of the lifestyle you want now and in the future.

The first thing to understand is the legal status of your relationship and how that affects your money. For couples who are unmarried or in civil unions, it’s important to understand the financial dimension of being in a de facto relationship.

What is a de facto relationship?

A de facto relationship can exist between two people of the same or opposite sex over the age of 18. Defining whether or not a relationship is de facto can be nuanced and needs to be determined on a case-by-case basis. In a lot of cases, a relationship can be considered de facto when: 

• You and your partner have been living together for at least three years as a couple 
• If you have a child together then your relationship automatically becomes de facto 

But these are not the sole criteria for meeting the legislative definition.Other things a court will look at when deciding whether two people are in a de facto relationship include:

• Length of the relationship 
• Place of residence – do you live in the same household? 
• Living costs – do you share living costs such as utilities, groceries and a mortgage? 
• Finances – are you financially dependent? 
• Division of household labour – do you share chores? 
• Care and support of any children 
• External perspectives – do your friends and family view you as a couple?

The same relationship property rules apply to an unmarried couple in a de facto relationship as a married couple. That means if you split up, each partner is entitled to share equally in the family home, family chattels and relationship property. 

Am I in a de facto relationship?

Often relationships aren’t so simple to define and so the definition of de facto can be quite nuanced. Determining whether or not you’re in a de facto relationship is important because it is the difference between the relationship being legally binding or not. If you’re still unsure, it’s a good idea to speak to a lawyer.

De facto relationships and finance 

In a similar way to a marriage ending in divorce, when a de facto relationship ends any relationship property must be divided up and this can be done either in or out of court.

The aggregate total of relationship property includes: 

• The family home
• Vehicles 
• Family assets: e.g. furniture, whiteware, jewellery, hobby equipment 
• Debt: e.g. mortgages and personal loans (which gets subtracted from the value of the assets)
• Investments: e.g. KiwiSaver member accounts, superannuation, investment funds, shares, investment property.

Even if you bring certain assets to a relationship such as significant savings or the home you both live in, these may still be considered relationship property and be split equally in the event of a breakup. A separation can be further complicated if one person is the main financial provider.

Do I need a contracting out agreement in a de facto relationship? 

Contracting out agreements (also known as prenuptial agreements) are an option if you want to set out who owns what and how to divide up a couple’s property or assets in the event of a separation. Contracting out agreements take a little bit of forethought and both parties must have individual representation from a lawyer to ensure the agreement is enforceable. But, a signed agreement recognised by law could save you a headache if the worst was to happen. 

Setting financial goals in a de facto relationship

It can be difficult to have conversations about money, but when your relationship becomes long- term it’s in your best interest to have the money talk and make some joint financial decisions early to save heartache down the track. 

The best rule for any money conversation in a relationship is to be open and honest. Start by being completely open with your partner on how much you earn, how much you save, what you like to spend your money on, and what you’re happy to save for. Does one person earn more than the other or is one person financially dependent on the other?

Compare your values and think about setting shared financial goals. A short-term goal could be a holiday to Fiji, while in the medium-term you might aim to save for a house deposit. Long-term, you might start working towards your ideal retirement lifestyle.

Make conscious steps towards these goals by determining each person's role in the relationship financially, and set up clear processes such as creating a shared bank account or shared investments to achieve them. 

It’s impossible to predict the future, but you can be prepared. That's where KiwiSaver comes in. Make sure KiwiSaver is a part of the initial financial conversation. If one of your goals is to purchase your first home together, or share a comfortable retirement, make sure you’ve both opted into a KiwiSaver scheme and learn more about how your balance grows. 

The MAS KiwiSaver Scheme can help you reach your financial goals, and we offer a range of tools and access to commission-free advisers to help you achieve them. 

Financial security in a de facto relationship

If you’ve committed to a long-term relationship, there are a number of ways you can protect your partner and family's future should anything happen to you. 

Just like you plan for your future with KiwiSaver, you protect your future with insurance. If you’re unable to work due to illness, how will you pay your rent or mortgage? Will your partner be able to maintain your current lifestyle without your income? This is particularly important if one person is financially dependent on the other or children are involved. 

Insurance for your family 

For peace of mind, consider income protection insurance, which will help replace lost income for a set period of time should you be unable to work due to sickness or injury. Your income is one of your biggest assets, and if you are in a de facto relationship, you might have dependents (such as a partner, children or elderly family members) who rely on your income to help pay their living costs, so it’s something worth protecting. 

MAS Income Security Insurance tops up your weekly income to 75% of your pre-disability earnings if you are unable to work due to sickness or injury. We recommend speaking to a MAS Adviser about your situation, to find out what protection MAS Income Security Insurance can offer you. 

Life insurance is also worth considering. The biggest loss you could face is the loss of future income for your family who rely on what you will earn to pay for all the things you are committed to doing and want to do such as maintaining your child’s education or paying off the house. There are also a lot of unexpected costs that can arise from a death – the funeral, medical bills, rent, debt or mortgage repayments will become a burden on your family at a time when they are at their most vulnerable. Life insurance pays a lump sum in the event of your death and could be a lifeline to keep your family, dependents, or children financially supported if you were to die. MAS Life Insurance cover can also pay up to $15,000 immediately, in advance of the sum insured, upon written notification of death.

If knowing your family will be taken care of no matter what happens to you sounds good, here’s how to get life insurance. 

Talk to a MAS Adviser 

There’s clearly a lot to consider about your finances and security when your relationship enters long-term territory. Sometimes it helps to talk over your options with an expert, so we recommend speaking to a MAS Adviser today about our income and life protection policies and your financial plans for the future.