Contracting Out Agreements
Relationship Property and Contracting Out Agreements
If you've been in a relationship with your partner for three years, all property classified as 'relationship property' is to be divided equally between the two of you, unless you have a Contracting Out Agreement in place.
What Is a Contracting Out Agreement?
A Contracting Out Agreement, commonly referred to as a "prenup", allows couples to contract out of the Property (Relationships) Act 1976 and decide how relationship property will be divided in the event of separation or death.
This agreement must be recorded in writing, and each party must receive independent legal advice. A lawyer must witness each signature and certify that they have explained the effects and implications of the agreement.
What Assets Can Be Classified as Relationship Property?
A common misconception is that all assets acquired prior to the commencement of a relationship will remain separate property. This is not always the case, as there are many instances where separate property becomes intermingled with relationship property.
Relationship property will usually include, but is not limited to:
The family home
Furniture and chattels
Vehicles
Income and business interests
Bank accounts in either party's joint or separate name
Contributions to superannuation or insurance policies
In summary, even if one party owned assets before the relationship began, if those assets have become mixed with relationship property, they may be classified as relationship property.
Why Do Couples Enter Into a Contracting Out Agreement?
Some common reasons couples choose to enter into a Contracting Out Agreement include:
Wanting to classify their assets and debts on their own terms
One partner having significant assets or an inheritance they wish to protect
Having a blended family and wanting to provide for children from previous relationships
Protecting themselves from each other's debts
Protecting What Matters Most
A Contracting Out Agreement can provide certainty, protect important assets, and help avoid costly disputes in the future. Whether you're entering a new relationship, bringing significant assets into a partnership, or planning for the future of a blended family, obtaining legal advice early can provide valuable peace of mind.
Every relationship is different, and your legal arrangements should reflect that. Contact Sutcliffe Matson Law today to discuss whether a Contracting Out Agreement is right for you.
Breanna Fuller
Email: breanna@smlaw.net.nz
Phone: 09 279 8351 ext 212
Zara Kotwal
Email: zara@smlaw.net.nz
Phone: 09 279 8351 ext 206
Christina Harrison
Email: christina@smlaw.net.nz
Phone: 09 279 8351 ext 203