Common Complications

Trusts and relationship property

Many people assume that property in a trust is protected from relationship property claims. This is not always the case.

The court can look at trust property in several situations:

Property transferred to defeat claims. If relationship property was transferred to a trust to deprive a partner of their share, the court can treat it as relationship property.
Trust controlled by one partner. If one partner effectively controls the trust as both settlor and trustee, the assets may still be vulnerable.
Compensation orders. The court can order one partner to compensate the other from their share of relationship property if trust assets are not available.
Trust settled during the relationship. If you settle assets on a trust during your relationship, your partner may acquire rights to those assets—or to the increase in their value during the relationship.

The Trusts Act 2019 has strengthened trustees' duties and beneficiaries' rights. If you have assets in a trust, it's worth reviewing your structure with both your trust lawyer and a relationship property specialist.

Business interests

Business interests—whether shares in a company, partnership interests, or sole trader businesses—can be relationship property if acquired or built during the relationship.

Key considerations include:

Valuation. Valuing a business for relationship property purposes requires expert input. The value includes goodwill, intellectual property, and future earning potential.

Personal vs business assets. Assets owned by the business (company vehicles, equipment) may be separate from assets owned personally.

Pre-relationship businesses. A business owned before the relationship may retain its separate character, but any increase in value during the relationship is often classified differently.

Inheritances

Inheritance is generally separate property, but how you use it matters:

Keep it in a separate account in your name only
Be careful about using it for joint purposes
The mortgage pay-off scenario is a common trap
Future inheritances need planning too

What your parents might expect. Often parents leave inheritance expecting it to stay in the family. If your relationship ends and you have intermingled that inheritance, half might go to your former partner. An agreement can honour your parents' intentions.

Gifts from family

Similar rules apply to gifts. A deposit gifted by your parents for your first home is usually separate property unless you are in a relationship, in which case it may become relationship property.

Debt and relationship property

Debts are also classified as relationship or separate. Relationship debts—usually those incurred for the benefit of both partners or the family—are shared in the same way as relationship property.

This includes:

Mortgage on the family home
Joint credit cards used for family expenses
Loans taken for joint investments

Personal debts from before or after the relationship generally remain with the person who incurred them.

"These complications are exactly why many couples choose to create a relationship property agreement. Agreeing on how these complex assets will be treated while you are getting along is far easier than arguing about them later."

Multiple partners or concurrent relationships

What happens if relationship property needs to be divided between more than two people? This can arise in complex situations and requires careful legal analysis.