Contracting out agreements, or prenuptial agreements, provide valuable protection and peace of mind as to what will happen to your assets in the event of a separation.
Sharon Chandra can help you make a plan for your assets to protect yourself in case your relationship comes to an end.
Contracting out agreements are commonly referred to as prenuptial agreements. They are agreements between spouses or partners on how their assets will be dealt with in the event of separation or death.
The purpose of a contracting out agreement is to “contract out” of what the law says.
There are various reasons why couples choose to enter into contracting out agreements. These include protecting assets one person is bringing into a relationship, marriage, or civil union. It can also include couples seeking to keep all their assets and income separate or achieve certainty about what will happen should a relationship end.
It is possible for a contracting out agreement to be tailored to suit the particular needs of each couple. Some agreements only deal with one specific asset, while others deal with everything a couple owns now and in the future. These agreements are common where one partner brings significantly more assets into a relationship.
The agreement must be signed by both parties and certified by lawyers for each party and, therefore, requires fair negotiation with the assistance of legal advisers.
Without a contracting out agreement, the law broadly provides for an equal sharing regime if a couple has been living together for three years or more.
There are some exceptions to the equal sharing regime. For example, when one spouse or partner earns significantly more than the other due to how they divided their functions during the relationship (such as parenting roles). Another example is if the relationship is only slightly longer than three years and there has been a significant disparity in the contributions by each spouse or partner.
It is important to understand that contracting out agreements need to be reviewed over time, as it is not a matter of simply signing an agreement and forgetting about it. As a couple’s circumstances change over time, the terms of the agreement need to be reviewed to reflect that change in circumstances.
The risk of not reviewing a contracting out agreement at regular intervals is that it could be susceptible to future challenges. Regular reviews of a contracting out agreement ensure the agreement remains robust and its susceptibility to contest in future is minimised.
A particular process must be followed to properly execute a contracting out agreement due to certain legal requirements that must be met. One of those requirements involves each spouse or partner needing to obtain independent legal advice. This means you each need to have your own lawyers to advise you.
The necessary advice involves outlining what your legal entitlement would be if you weren’t signing the agreement versus what your entitlement is under the terms of the agreement.
This allows you to understand exactly what you are giving up or gaining by signing the agreement. Undertaking this analysis necessarily requires obtaining various documents regarding the value of assets and liabilities held by each spouse or partner.
Discussing a contracting out agreement can be a sensitive subject. Prenuptial agreements are a great way to provide certainty in the unfortunate event of separation or death. Sharon Chandra can help you navigate an agreement to suit everyone.
If you would like assistance with a contracting out agreement, please get in touch with Sharon to arrange an appointment.
It’s ideal to consider a contracting out agreement before entering a relationship where assets could be divided in the future, such as before marriage or moving in together. The agreement can also be established during the relationship to safeguard assets.
Yes, contracting out agreements are legally binding in New Zealand, provided they meet certain criteria, such as being in writing, signed by both parties, and each party receiving independent legal advice.
Both parties must willingly agree to the terms for the agreement to be valid. If your partner refuses to sign, it’s important to discuss the reasons and seek legal guidance on the best course of action.
The time to complete a contracting out agreement varies depending on the complexity of the assets and the discussions between both parties. It’s best to start the process early to allow sufficient time for thorough legal review and negotiation.
If you’re considering a prenuptial agreement to protect your assets and ensure peace of mind, Sharon Chandra is here to help. With her expertise in family law, she will guide you through the process with care and professionalism. Contact Sharon today to discuss how a contracting out agreement can provide clarity and security for your future.
