Best Practices & Key Considerations for Contracting Out Agreements
Do you want to ensure that you and your partner are on the same page regarding your shared and separate assets? Consider a contracting out agreement. If you’re in New Zealand, you can legally get one.
Contracting out agreements, commonly known as ‘prenups’ or prenuptial agreements, are contracts between spouses or partners. This contract specifies what happens with their assets in the event of separation or death. In New Zealand, prenups have been allowed and further strengthened by the Property (Relationships) Act 1976 provisions.
Working out a prenup can be an awkward process for some relationships, but it gives couples the benefit of deciding who owns what and how to divide their properties. In most cases, couples split these assets equally. While discussing prenups with a significant other may not always feel comfortable, it can benefit both parties.
Below, we share the best practices and key considerations for signing an effective written agreement.
Know the law
First things first, know the law. Learn the specifics of The Act as the laws change based on the length of your relationship.
For the agreement to be deemed valid, you must meet the following conditions:
- Both parties must formally execute the agreement in writing.
- Before agreeing to the terms, each party must seek independent legal counsel.
- Each party’s attorney shall attest to the execution of such party’s signature.
- Before signing, the attorney who attests a signature must certify that the client is fully aware of the agreement’s ramifications and effects.
If you think you need one, get it ASAP
Contracting out agreements can be made at any time: upon entering, during, or at the end of a qualifying marriage, civil union, or de facto relationship. You can enter a contracting out agreement even once your relationship crosses the three-year threshold (as stipulated in The Act).
If you wish to prevent difficult conversations or potentially costly legal issues in the future, then discussing this one with your partner is a must. If you think you’ll need one, it’s best to get it as soon as possible, especially if you and your partner have reached a mutual understanding.
Make sure they are willing
Such agreements are more common with couples where one partner has significantly more assets than the other. Both parties involved must commit because this process is voluntary.
Prenups must be conscionable and fair for both. Thus, along the same line, fairness and honesty are key to the process. You are obligated to disclose your finances and properties. You must present your latest financial records and even liabilities statements. It’s crucial to prevent one side from signing an agreement without being informed of the rights they’re signing away.
Get a good lawyer
Each party must have independent legal counsel on the written agreement. Spend some time looking for a good lawyer. They may recommend better terms or advise you on whether to finalise the deal. If discrepancies arise, your lawyer will deliver essential conditions tailored to fit you without compromising the other party’s status.
Ask advice from people you trust
The contracting out agreement process involves a lot of personal information and complicated steps. It’s wise to ask a trusted person about the agreement and their experiences with prenups. You can also ask them to recommend experienced prenup and will contest lawyers. Gathering their opinions might save you time and money should you and your partner fall out.
Though discussing it may be a little awkward, contracting out agreements are incredibly common. With this article, we hope you better understand this contract.
