In New Zealand prenuptial agreements are called a “contracting out agreement”. The Property (Relationships) Act 1976 (the “Act”) by default directs that couples who have been “living together” for three years or more whether married or de facto partners are entitled to half each of the relationship property. Couples will often enter into agreements to “contract out” of the provisions of the Act.
It is not easy to determine when a de facto relationship starts as living together and time living apart does not necessarily mean there is no relationship. When determining if your relationship is a de facto relationship, some of the following factors can be taken into account:
• The nature and extent of shared living arrangements;
• Whether or not a sexual relationship exists;
• The performance of household duties;
• How do family and friends view the relationship; and
• The degree of financial dependence between the parties.
Some couples do not give any thought to whether they are in a de facto relationship or not, and therefore are surprised that the principle of equal sharing of relationship property applies when the relationship breaks down.
Relationship property includes items such as the family home you live in and chattels, no matter who brought such items to the relationship. It can include other items such as motor vehicles, Kiwisaver, superannuation, and cash in bank accounts.
To “contract out” of the equal sharing requirement and to define your own rules, should your relationship come to an end, a written agreement can be made between you and your spouse/partner. You both must receive independent legal advice before signing the agreement. A lawyer must witness your signature and certify that they explained to you the effects and implications of the agreement.
There is a misconception that only wealthy people enter into this type of agreement. You should consider entering into such agreement when you and your spouse/partner come into the relationship with assets (and debts) that are not equal in value. For example, if one party has contributed more cash towards the purchase price of a property. You might also consider entering into one if you have been through a separation and would like more certainty should your current relationship end or you die.
The agreement will be unique to your situation and is not a “one size fits all” document. There is no fixed cost for a contracting out agreement as it depends entirely on the complexity of your situation. If you would like further information on this please contact Natasha McClure, Associate (DDI 03 343 8451 / firstname.lastname@example.org).