Most people understand that the family home gets divided equally when couples decide to divorce. But what happens when divorce property includes a beach house that was bought with an inheritance of one partner or the proceeds of sale of property owned by one partner before the relationship began? It all depends upon the facts. The questions and answers below illustrate how different facts produce different outcomes.

During our relationship my husband used an inheritance to buy a beach house in Gisborne in our joint names. Now that we have agreed to divorce, do I get half?

This is one of those areas of divorce property law where the law is not entirely clear. The starting point is that your husband’s inheritance was his separate property which means it does not get shared equally between you. The current prevailing view, supported by a number of court decisions, is that, even though the property is in your joint names, because the property was the product of your husband’s inheritance it stays his separate property despite the fact that it was acquired for your common use and benefit. However, for examples of situations where increases in value of property get shared and don’t get shared click here.

During our relationship my wife received an inheritance. She used that money as well as a bank loan to buy a beach home in her name which we used as a holiday home. Now that we have agreed to divorce does my wife get her whole inheritance back?

The starting point is that your wife’s inheritance was her separate property which means that it does not get shared equally. Even though your wife used the inheritance to purchase a beach house for you both to enjoy and the purchase was made with the assistance of mortgage finance the property may remain your wife’s separate property. That is because the inheritance is still identifiable;  arguably it has not been intermingled and the equity in the property was acquired with separate property meaning that the existence of the mortgage can be ignored. If the beach property has increased in value since it was bought, its classification as partly relationship and partly separate is likely to be in the same proportions as the original sources of the funds.  However, for examples of situations where increases in value of property get shared and don’t get shared click here.

During our relationship my husband used an inheritance from his mother plus money he saved from his salary earned during the relationship to buy a beach house in his name which we used as a holiday home. Does he get to keep it now that we have agreed to divorce?

The starting point is that your husband’s inheritance was his separate property which means there is no automatic 50-50 sharing of that property. However, your husband’s salary savings during the relationship are relationship property which means that the beach house was bought partly out of separate property and partly out of relationship property. An inheritance received by one partner can however become relationship property if it has been intermingled with relationship property. Whether intermingling has taken place should not depend on the use the property was put to during the relationship, the key factor being whether it is unreasonable or impractical to regard the inheritance as separate property. That depends on the facts and circumstances of each case. A divorce lawyer acting for your husband could make a fairly decent argument that the inheritance was still clearly identifiable and thus remains separate property according to the proportion of the purchase price that the inheritance constituted. However, for examples of situations where increases in value of property get shared and don’t get shared click here.

During our relationship my wife sold a property that she owned before our relationship began and used the proceeds buy a beach house in her name which we used as a holiday home. Does she get to keep it now that we have agreed to divorce?

Your wife’s property that she owned before the relationship was her separate property which means that there is no automatic 50-50 sharing of that property. However, as a divorce lawyer will tell you, the fact that your wife used the proceeds of sale of that property to buy the beach house which you both enjoyed means that the beach house becomes relationship property. That is because it was a property acquired during the relationship for your common use and benefit. It doesn’t matter that the property is in your wife’s name only.

For further reading about how increases in the value separate property can become relationship property click here.

Alex McDonald I Divorce Lawyer | Auckland