A Prenuptial Agreement or ‘Pre-Nup’ (better called a ‘Relationship Property Agreement’) is a written contract entered into by two people to decide how they want their property to be divided during their relationship, and if their relationship should end.
Historically, pre-nuptial agreements were entered into prior to marriage and, broadly speaking, were drafted to protect the husband’s wealth. The term ‘pre-nuptial’ referred to the fact that the agreement would be signed prior to the couple saying their nuptial vows. In the modern, New Zealand context we have a range of factors to consider which may support a couple entering into a relationship property agreement at anytime during a relationship, not just prior to marriage.
Why do you call it a ‘Relationship Property Agreement’?
We prefer the term ‘Relationship Property Agreement’ as this does not suggest a couple will only sign one prior to marriage, and it better reflects the couple’s actual intention. That is, to decide how their relationship property will be divided during their relationship, and if their relationship ends.
Why would I want a Relationship Property Agreement?
In New Zealand the law provides a default position that a married couple, civil union couple or de facto couple are, on separation, to share their property 50:50 (this is known as the equal sharing regime). For many couples this does not provide for a fair division of relationship property; or it does not take into account extenuating circumstances (for example, mixed families).
It’s easier to agree when you’re happier: In our experience, parties who come to us during a relationship to discuss their property affairs will reach agreement with less stress than those who are doing so after the relationship has ended. Following a relationship breakdown it is only natural for the parties to have mixed emotions, to feel upset, stressed, worried and/or anxious. These feelings can make it difficult to make decisions or to make decisions that are in your best interest.
By discussing these issues in an objective manner before there is any hurt or pain can help you both ensure that your arrangements are suitable for both of you during your relationship and that they adequately provide for you both should your relationship end.
Do I need to see a lawyer?
Yes, in New Zealand both parties must see an independent lawyer to get advice on the agreement prior to signing and both lawyers must also sign the agreement.
Factors for Consideration:
While not an exhaustive list, the below provides some factors which would support you considering a relationship property agreement.
Children: It is quite likely that you will be considering raising children (or you might be already). This may require one of you to give up work, or if two parents are coming into a relationship, this may enable one of you to return to the work force. This will enable one person to enhance their career and earning ability while working whereas the other may miss out on this opportunity.
By agreeing on financial arrangements in advance you may be able to help minimize your children’s exposure to the stresses of a parental separation. For example, by having their post-relationship accommodation agreed to and ensuring the primary caregiver has the financial means to care for the children.
Business Owners: If you own a business your partner may end up owning a share of your business. A relationship property agreement can help ensure that your partner does not become an unwanted business partner.
High Debt: What if your prospective (or current) partner has high debt? What if this comes from frivolous spending and there is little to show for it? This may put you off taking that next step in your relationship as you do not want to end up paying for their earlier decisions. By having a relationship property agreement you can help to ensure that you do not become liable for their debt.
Previous Relationship: A relationship property agreement may be suitable if one or both parties to a relationship have been in a previous relationship. This may have been for some years or decades and/or there may be children of that past relationship. In this situation a party may wish to protect the labours of their previous relationship whether for themselves or for their children (legacy building).
Having been in a previous relationship and gone through the division of relationship property one party may also be wary of rushing into another relationship. In this situation, the use of a relationship property agreement may help move a relationship forward as it provides a backstop to potential disputes.
Wealth: If one party is especially wealthy, having a relationship property agreement may be a suitable way of ensuring that their new partner isn’t in it just for the money. Conversely, if you are much poorer (whether in assets or earning ability) then your partner you could look at it the other way and make sure that you are provided for if the relationship ends.
De Facto Partners: NZ law defines a de facto relationship as being between two persons (whatever their gender), who are both aged over 18 years old, who are not otherwise married or in a civil union and who live together as a couple. The term “living together as a couple” refers to a number of factors and not just how long the couple has been together. This matters as you may inadvertently be subject to the equal sharing regime when you do not want to be.
Summary: There are many reasons to have a relationship property agreement and the above is not an exhaustive list. We hope that it will get you thinking about your own arrangements and whether a relationship property agreement is right for you.