A Contracting Out Agreement, commonly known as a “Pre-Nup,” allows couples to set their own rules regarding property division in the event of separation or death. While these agreements are becoming more common, the importance of regularly reviewing them is often overlooked.

Simply signing a Contracting Out Agreement and stashing it away without revisiting it for years can pose risks. Over time, circumstances change, potentially weakening the agreement’s enforceability and making it more vulnerable to challenges in the Family Court.

The Court can invalidate a Contracting Out Agreement if its terms lead to “serious injustice.” While this standard is high, significant changes in a couple’s circumstances can render the agreement unfair. These changes may include financial shifts, such as job loss or inheritance, as well as non-financial factors like health issues or the birth of children.

Reviewing a Contracting Out Agreement serves three key purposes:

1. Ensuring Comfort and Understanding:

– Reviewing the agreement ensures both parties are still comfortable with its terms and understand its provisions.

2. Assessing Fairness and Suitability:

– It allows couples to gauge whether the agreement remains fair and fit for their current situation.

3. Mitigating Legal Risks:

– Regular reviews help reduce the likelihood of successful challenges to the agreement in the future.

When conducting a review, it’s advisable for both partners to seek legal advice, exchange updated disclosure of their property interests, and discuss how the agreement applies to their current circumstances. Depending on the findings, it may be prudent to execute a short addendum Agreement to document any revisions or variations.

If you have a Contracting Out Agreement and are considering a review, don’t hesitate to reach out to us for guidance. Regular reviews can help ensure your agreement remains valid, fair, and legally robust.