“Prenups” aren’t just Hollywood headlines. They are quietly becoming a part of everyday Kiwi relationships, helping couples avoid costly disputes down the track. Often known as “prenups”, a Contracting Out Agreement allows a couple to decide how they want their separate property to be dealt with if separation or death occurs. If no agreement exists, the general Relationship Property laws will apply, sometimes resulting in very unfair outcomes for one or both parties.
With property prices high and more young Kiwis relying on support from the “bank of mum and dad,” protecting what you bring into a relationship is increasingly crucial, not just precautionary. Add to this, couples marrying later, second or third relationships and blended families increasingly becoming the norm. These factors make a clear agreement about assets and debts even more important. Whether it’s protecting inheritances, property, or prior investments, a Contracting Out Agreement can provide certainty for all parties involved.
A well drafted agreement can be discussed, agreed, signed and put away in the drawer where one would hope it is never needed. It can cover everything from previously owned houses and investments to inheritances and personal belongings. To be legally binding, both parties must get independent legal advice and have the agreement certified by their advisor.
Common mistakes can render an agreement impossible or ineffective:
- Waiting too long: Once a couple has lived together for three years, the law may treat all acquired assets as shared property, making late agreements more difficult. The earlier the agreement is prepared and signed the less complicated it should be.
- Incomplete disclosure: Failing to list all assets, or not obtaining accurate valuations, may leave your agreement open to challenge. Careful structuring around company and trust assets is important to avoid costly disputes in future.
- DIY approaches: Templates or online forms won’t suffice and end up costing more. Legal oversight is essential for enforceability and fairness.
Not every couple needs one. They are most relevant when one or both partners bring significant assets into a relationship, or if there are children from previous relationships. Even so, having a properly drafted agreement can provide clarity, protect what is important, and prevent unnecessary conflict if the relationship ends or one party dies.
Ultimately, a “prenup” isn’t about anticipating the worst but about planning responsibly for the future.