Eight Pre-nuptial Myths
There are eight things you probably didn’t know about pre-nuptials
- They’re only for people who are about to get married – What is commonly called and understood as “a pre-nup agreement” is for married couples, civil unions, and couples who live together in a de facto relationship; not just people about to get married. The correct name is a “contracting out agreement”, because it allows couples to “contract out” of the Property (Relationships) Act 1976 (“the Act”). The Act governs how the property of couples in relationships should be divided at the end of their relationship. By entering into a contracting out agreement, you decide how your property is divided when your relationship ends by separation or death.
- I’m all sorted. All my assets are in my trust – There used to be a time when you could protect your assets by putting them in a trust. Sadly, those days are gone. Trusts can be challenged, and your entitlements under your trust can be subject to a relationship property division. If you really want to ensure your assets are protected or already have a trust in place, we highly recommend you have a contracting out agreement in place as well.
- My partner and I have already talked about it, and they promised me they won’t go after my stuff if we separate – An agreement, oral or written, made between two parties will not be binding unless it has been entered into under section 21 of the Act, as a contracting out agreement and complies with certain requirements.
- But, I bought this house way before I met my partner – Sorry! Currently, under the Act, the “family home” becomes relationship property after three years regardless of who purchased it.
- You can just download a template agreement from the internet and take it to a lawyer to get it signed – Firstly, no lawyers (at least, most lawyers) will sign off an agreement that you have prepared and presented to them. Secondly, a contracting out agreement requires more than witnessing: it requires the lawyer, who witnesses the signature of a party, to “certify” that the effect and implications of the agreement has been explained to that party.
- But I don’t want my partner to know everything I own – A contracting out agreement should list all of the assets that are to be covered by the agreement. So if you want to protect it, disclose it in a way that is clear enough to identify the asset.
- What’s mine is mine. What’s yours is yours. Isn’t that fair? – If you keep everything separate, you run the risk of the agreement becoming unfair later on; especially if, there is a disparity in your wealth or incomes, as there is no opportunity to accumulate relationship property.
- It’s a waste of money – If you have something worth protecting, get a contracting out agreement. Not having a contracting out agreement could cost you a lot more later on.
Should you wish to discuss any of the above and how it may affect you, please do not hesitate to contact Christina Lee (DDI: (09) 969 1212; c............@glaister.co.nz).