In the realm of relationship breakdowns, there are often multiple versions of the truth – hers, his, and somewhere in between. No one wants to feel unfairly treated or taken advantage of post-breakup. While such situations may arise, they are not inevitable.

Understanding the legal landscape regarding asset division after a relationship ends is crucial. Unfortunately, this knowledge is not common, leading many to neglect protective measures at the right time. Some are aware of the rules but adopt a ‘she’ll be right’ attitude, risking significant consequences. It’s far better, and more cost-effective, to be adequately prepared for unforeseen circumstances than to deal with the aftermath.

The legal stance on property division is straightforward – in cases of relationships lasting more than three years, a general rule applies: assets are to be divided equally. However, exceptions exist, such as:

1. Inheritances & 3rd Party Gifts:
   • Treated as separate property and protected from relationship property claims.
   • If used for the relationship’s benefit, like contributing to the family home, it loses its separate property status.
2. Property Acquired Before the Relationship:
   • Deemed separate property and shielded from relationship property claims.
   • If utilized for the relationship’s benefit, it loses its separate property status.
3. ‘Contracting Out’ Agreement:
   • A robust tool for protecting inheritances, gifts, and pre-relationship property from relationship property claims.
   • Defines each partner’s separate property and ensures protection in the event of a relationship breakdown.
   • Requires independent legal advice for both parties to be valid and enforceable.

If you are entering or are already in a relationship, seriously consider a ‘Contracting Out’ Agreement if:

• You have experienced a previous failed relationship.
• You bring significant wealth to the relationship.
• You anticipate a substantial third-party gift or inheritance.
• You have children from a previous relationship.
• You have an interest in a third-party trust, partnership, or company.

While discussing such matters may be sensitive, statistics show that half of all New Zealand marriages end in divorce. Acting sooner rather than later increases the likelihood of successfully convincing your partner to enter into a ‘Contracting Out’ Agreement.

Knowledge and timely action are key. Now that you understand how to protect yourself and your assets effectively, don’t ignore the issue – take proactive steps to safeguard your family inheritances, gifts, and pre-relationship property with a ‘Contracting Out’ Agreement.