Contracting out agreements are growing in popularity in New Zealand, showing that more couples consider them necessary.
These agreements allow parties to decide how their relationship property will be divided if they separate (or if either of them passes away), within prescribed limits, instead of defaulting to the Property (Relationships) Act 1976. For instance, there is a presumption of equal division of all relationship assets but you can agree to contract out of this through an agreement.
In particular, we see contracting out agreements common in situations where:
- A person enters a second or subsequent relationship later in life, especially if there is property which they wish to protect as their separate property
- Someone buys their first home with their partner and makes unequal initial contributions
- One person has interests in or with third parties such as trusts, partnerships, or companies.
For an agreement to be valid:
- The agreement must be in writing
- Both parties must have received independent legal advice, and have been advised of the effect and implications of the agreement
- The agreement must be signed by both parties and the signatures must be witnessed by the parties’ respective lawyers
The agreement can be tailored to your specific needs, and has the benefit for both parties in terms of knowing exactly where they stand just in case things do not work out, avoiding the need for lengthy litigation.
If you are unsure whether you need a contracting out agreement, or would like advice on your current entitlements under the Act, then please get in touch. Our family team have expertise in this area and are here to assist.