The Property (Relationships) Act 1976 governs the division of relationship property in the event of a breakup in marriages, civil unions, or qualifying de facto relationships. While the Act provides a standard framework, couples have the option to tailor their own arrangements by ‘contracting out.’ This flexibility allows parties to deviate from the default rules set by the Act.

Why Consider Contracting Out?

Various scenarios warrant ‘contracting out,’ including situations where one has a substantial estate, entering a second marriage, bringing different asset levels into the relationship, or simply preferring a customized arrangement. Many items, often overlooked, become relationship property under the Act, such as income, KiwiSaver growth, specific debts, jointly used property, or separate property appreciation influenced by a spouse’s actions. Addressing these specifics in an agreement is crucial.

Requirements for Contracting Out

For a ‘contracting out’ agreement to be valid, strict formalities outlined in the Act must be followed. This includes documenting the agreement in writing with signatures from both parties. A key requirement involves both parties seeking independent legal advice from a New Zealand lawyer with a valid practising certificate, certifying the agreement’s validity. Each party must consult their lawyer separately to ensure unbiased advice. Failure to obtain independent advice renders the agreement invalid, reverting to the default provisions of the Property (Relationships) Act.

Planning Ahead: A Prudent Approach

Contemplating a marriage, civil union, or de facto relationship provides an opportunity to think ahead about how assets should be divided in the unfortunate event of a breakup. ‘Contracting out’ allows couples to proactively shape their property division, providing a tailored approach that aligns with their unique circumstances.