Providing disclosure can feel unnecessary when going through the process of dividing your relationship property, particularly in an amicable separation. However, the provision of disclosure from both parties is what makes a separation agreement valid and durable, and getting it organised early is one of the most useful things you can do for both the strength of the agreement and the cost of getting there.
Disclosure is a requirement for a valid agreement
There are specific requirements, prescribed by the Property (Relationships) Act 1976 (the Act), for a separation agreement to be valid. One of these is that each party must receive independent legal advice before signing.
That advice must include an explanation of the effects and implications of entering into the agreement. This means each party’s lawyer needs a thorough understanding of what their client would otherwise be entitled to under the Act, and how the terms of the proposed agreement depart from that entitlement.
Disclosure is the practical foundation for working out what a fair division actually looks like. Lawyers cannot accurately assess entitlements, or negotiate effectively, without a complete picture of what is in the relationship property pool and what sits outside it. Without full disclosure, a party may end up receiving less than they were entitled to, sometimes without ever realising it.
Protecting an agreement from being set aside
Courts can set aside a separation agreement that otherwise meets all the technical requirements for validity, if giving effect to it would cause “serious injustice”. This is a high threshold, but non-disclosure and concealment can lead to this outcome.
Where one partner conceals assets or creates a misleading impression of their financial position during disclosure, an agreement signed on that basis is vulnerable to challenge, sometimes years after it was signed. This can undo an outcome both parties thought was final and can expose the non-disclosing party to a worse result than if they had disclosed honestly from the outset.
A separation agreement reached on the basis of complete and accurate information is far more difficult to unwind later. Therefore, ensuring that full disclosure is provided, allows both parties to move on with genuine certainty, rather than a settlement that could unravel down the track.
Preparing your disclosure early saves time and money
Gathering the documents needed for disclosure can feel like an added burden at an already difficult time, but doing it early is one of the most effective ways to keep a separation agreement moving and keep your legal costs down, particularly if you can limit the need for your lawyer to spend time chasing outstanding information, following up with the other side, and revisiting advice once new documents come to light.
The more complete your disclosure is when you first meet with your lawyer, the less time is spent on back-and-forth requests, and the sooner your lawyer can move on to giving you substantive advice and progressing your settlement. Coming prepared is one of the simplest ways to keep the process, and the cost, under control.
What disclosure typically covers
The information required will vary depending on individual circumstances, but disclosure commonly includes the following. Having these ready before your first meeting will help your lawyer get started straight away:
- Bank statements showing the balance of accounts held solely, jointly, or with a third party
- Statements showing the balance of lending, including any mortgage, personal guarantees, and tax debt
- Credit card statements
- KiwiSaver or superannuation statements, both current and historical
- If applicable, financial statements for any companies either party has an interest in
- If applicable, trust deeds and financial statements for any relevant trust
Getting advice
When a couple separates, full disclosure of assets and liabilities is required. It is often one of the less comfortable parts of dealing with relationship property, but it is a requirement for the agreement to be valid, not simply good practice. It also pays off practically as having your disclosure ready before you meet your lawyer can significantly streamline the process and reduce your legal costs.
If you are working through a relationship property matter, it is worth speaking with a lawyer early about what disclosure you will need to provide and request.
