Laws can’t keep up with modern relationships

Property law and rules around benefit fraud are not keeping up with the changing landscape of relationships, with many in de facto relationships now seeing themselves as financially independent. Baz Macdonald surveys that new landscape and explains what it means for an ongoing Law Commission review of the Property (Relationships) Act of 1976.

Whether you are a student, pensioner or just trying to find a job, the Government has a range of financial aids to help you out. But for many New Zealanders in de facto relationships, the applications for these services contain a seldom-discussed legal and ethical quandary.

Rachael, a 26-year-old toxicologist, was presented with this dilemma when applying for Job Seeker support last year.

Though she and her partner had lived together for three years, they were still financially independent of each other. So, when Rachael reached the question ‘Are you in a de facto relationship’ on the application, though legally she thought she might be, she ticked ‘No’.

By ticking ‘Yes’ Rachael felt Work and Income New Zealand would have an expectation that she was being financially supported by her partner just because they lived together, so she chose to tick ‘No’ so they understood that she was not.

“He couldn’t afford to pay [our rent alone] and didn’t really want to – I didn’t expect him to either. I was thinking that they would give me no money because he is earning and I am not,” Rachael said.

Financial Planner Liz Koh said increasingly young couples in de facto relationships are maintaining financial independence and it is becoming more common for people in their twenties and early thirties to manage their money separately than it is to manage it jointly.

As of 2013 there were 409,380 people who identified as being in a de facto relationship in New Zealand, compared with 87,960 in 1981 when figures were first collected.

As these trends continue, it stands to reason that more and more young people are going to be faced with the same situation as Rachael, asking themselves - if I am financially independent, why should my relationship have any bearing on my fiscal situation?

How do you know if your relationship is de facto?

Complicating the issue is the lack of understanding as to what a de facto relationship is and what qualifies you to be in one; many couples fall into this category without even realising they have done so.

Rachael, for instance, was unsure when filling out her application if she and her partner even qualified as a de facto relationship, due to the fact they had been living outside New Zealand for several years.

Family Lawyer Simon Jefferson said this is not unusual because of how varied relationships have become, and the looser defining markers of a de facto relationship compared to marriage or civil union.

“If you are married you have a certificate that says you were married where and what day. With a de facto, it tends to be much vaguer.”

A de facto relationship is a long-term relationship between a couple living together who have not been married or had a civil union. When the Government defined this status in the 2001 amendment of the 1976 Relationships Act, they decided to make the legal rights of a de facto relationship essentially the same as if the couple were married. The most common effect of this is that, should a couple break up, they would be legally entitled to half of everything.

However, the complication of a de facto relationship is that there is no action involved to define you as such (like a wedding, for example). Rather, a couple will simply meet criteria at some point in their relationship which will define them as a de facto partnership.

The primary determining factor is if you live together as a couple. The length of time you’ve lived together is also key, with a general rule saying that three years is the threshold.

But even then, the 2001 amendment to the Relationships (Property) Act illustrates time as just one factor in determining your de facto status. This amendment contains the most comprehensive legal definition of a de facto relationship:

(2) In determining whether 2 persons live together as a couple, all the circumstances of the relationship are to be taken into account, including any of the following matters that are relevant in a particular case:

(a)  the duration of the relationship:

(b)  the nature and extent of common residence:

(c)  whether or not a sexual relationship exists:

(d)  the degree of financial dependence or interdependence, and any arrangements for financial support, between the parties:

(e)  the ownership, use, and acquisition of property:

(f)  the degree of mutual commitment to a shared life:

(g)  the care and support of children:

Simon Jefferson had written that the considerations of all these points make it impossible to create a universal principle which defines a de facto relationship.

This leads to confusion when people are confronted with the question ‘Are you in a de facto relationship?’ in applications for financial aid.

“You get a form that asks ‘Are you in a de facto relationship?’ and you say, ‘I’m not sure … I don’t know’,” said Jefferson.

How do the Ministry of Social Development define de facto relationships?

The Ministry of Social Development use the definition of de facto relationships found in the 1999 Interpretation Act, which also says it is defined by a couple living together. However, the MSD have created guidelines which allow for a more concrete definition of a what de facto relationship is, breaking it down into two components; emotional commitment and financial interdependence.

Financial interdependence is how joint your finances are. It asks questions such as, do you have joint accounts? Do you own property, cars and real estate together? Do you share payment of bills and everyday expenses?

The Ministry disregards financial independence as a reason to check ‘No’ by saying that financial interdependence “includes the sense of at least a willingness to support the other person if that person cannot support themselves. This does not mean that the financial support already exists, but that it would if needed”.

Emotional commitment is essentially a judgment of how emotionally invested you are to each other. Do you see each other as a couple? Does the public? Do you have a similar social circle? Do you emotionally support each other? If the answer to most of these is yes, then you are emotionally committed.

If you can honestly say no to either one of these then the Ministry say you can legally check ‘No’. But if the answer to both of them is yes, you are legally obligated to check ‘Yes’ that you are in a de facto relationship.

Are laws around de facto relationships relevant in 2017?

Some young people believe that these parameters do not accurately depict how modern relationships operate. Many people in de facto relationships told Newsroom they consider there to be little connection between their relationship and financial situation.

Dani, a 25-year-old gym consultant, was confronted with this assumption when buying a house with her partner six months ago. She thinks this law represents an antiquated model of relationships that has not kept up with the modern paradigm.

“I think it has something to do with more traditional gender roles back then. You know, the male was seen as the breadwinner and the female maybe not working as much. My parents had joint bank accounts from when they were quite young. But nowadays a lot of couples are both working,” said Dani.

Dani and her partner are also completely financially independent of one another, sharing payments of their mortgage and utility bills much as flatmates might. They both maintain their own bank accounts.

“If he is working for that money, it should be his to spend how he wants, and vice versa. It should not be the expectation that he should pay for me to live, just because we have been together for that long. I think that is unfair,” Dani said.

Dani described the financial process of buying a house with her partner as being similar to how it would be if two friends got a mortgage.

The New Zealand Law Commission have been working on a review of the Relationships Act for the past 18 months. Senior Legal and Policy advisor at the Commission Lisa Yarwood said that the age of the act was a motivator behind the review.

“When we got this [assignment] last year it had been 40 years since the act came into existence and the last big set of amendments was in 2001. So that is a really long time.”

Simon Jefferson said that regardless of how well it represents modern relationships, people are obligated to follow the law as it is, not as they would like it to be.

“The amount [of money] that the Government gives you is dependent on your relationship status. That is what the rules currently are. Is that right? Well, that is more philosophical than legal. The legal answer is it is right, because that is what the law says. But is it philosophically correct? I’m not qualified to answer that,” said Jefferson.

What are the legal ramifications to ticking ‘No’?

A Ministry of Social Development spokesperson wrote:

“If a case manager suspects that a client may not have answered a question correctly, they may contact the client to discuss their relationship status. If fraud is suspected the matter may be referred to the Ministry’s Fraud Unit to investigate.

"The Unit has a dedicated team of around 105 specialist fraud investigators located throughout the country.”

They said that investigations often include interviews with both partners and third parties in order to verify the circumstances of your relationship.

Jefferson said that many court cases have shaped how de facto relationships are interpreted when it comes to the separation of a couple, but there is only one key case in defining the role of financial independence.

In Ruka v DSW, the Court of Appeals found that Ms Ruka was not guilty of benefit fraud as she could prove that she did not have financial interdependence with the man she was living with.

What can you do?

It is possible to legally opt out of the property aspect of a de facto relationship. This means that when it comes to property, your relationship will no longer be considered the same way as a marriage of civil union in the eyes of the law.

When purchasing their home, though Dani and her partner had only been together two years, they decided to opt out to protect their personal financial interests.

“The way we see it is that just because we have been together a certain amount of time, doesn’t mean that we should get half of each other’s things,” said Dani.

However, there are financial costs associated with opting out, as both parties require their own lawyer in the process.

“It actually cost us quite a bit. We both had to have a lawyer and one of the conversations was two minutes and cost us $600. So, it cost us about $1200 to do the opt out agreement,” said Dani.

“It’s really silly. We had to opt out of a decision which was made for us and was against what we believe.”

What is happening next?

The Law Commission plan to release their initial report on October 16, highlighting any issues in the act and what changes could be made. The review would then be open for submissions before final recommendations are delivered to the Government by November 2018.

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