When people hear the word “pre-nup,” they usually picture something out of a Hollywood movie — a wealthy couple protecting their fortune before a big wedding.
But in New Zealand, contracting out agreements are far more common, far more practical, and available to a much wider range of people than the stereotype suggests.
Under the Property (Relationships) Act 1976 (PRA), couples — whether married, in a civil union, or in a de facto relationship — can enter into an agreement that sets out how their property will be divided if they separate, or when one of them dies. These agreements are known as “contracting out agreements,” because the couple is essentially agreeing to opt out of the default rules the PRA would otherwise apply.
Why would you want one?
The PRA’s default position is that most property acquired during a relationship of three years or more is divided equally, regardless of who paid for what. For many couples, that’s a fair and sensible outcome. But for others — particularly those who bring significant assets, a business, an inheritance, or children from a previous relationship into a new partnership — the default rules may not reflect what feels fair or practical.
A contracting out agreement lets couples decide for themselves how property will be treated, rather than leaving it to the default formula.
Pre-nuptial agreements: before you tie the knot
A pre-nuptial agreement (or “pre-nup”) is entered into before a couple marries, enters a civil union, or moves in together as de facto partners. It typically sets out:
- Which assets are to remain separate property (for example, a house owned before the relationship, a family business, or an inheritance)
- How relationship property will be divided if the relationship ends
- How debts will be treated
- What happens to property on death
Pre-nups are especially common for people who have accumulated assets earlier in life, who are entering a second or third relationship, or who want to protect a family business or farm from being divided in the future.
Post-nuptial agreements: after the relationship has begun
A post-nuptial agreement (or “post-nup”) is essentially the same kind of agreement, but entered into after the relationship has already started — sometimes years into a marriage or de facto relationship. Couples might choose to formalise a post-nup for a range of reasons:
- They didn’t get around to it before marrying or moving in together
- Their financial circumstances have changed significantly — for example, one partner has received an inheritance or started a successful business
- They want certainty and peace of mind going forward
- They are separating and want to formally record how property will be divided, without going through the courts
There’s no requirement that couples must have discussed property arrangements before the relationship began — a post-nup can be entered into at any stage.
What makes these agreements legally binding?
This is the part people often get wrong. A contracting out agreement isn’t as simple as writing something down and signing it. For the agreement to be valid and enforceable under the PRA, a number of formal requirements must be met:
- The agreement must be in writing
- Both parties must sign it
- Each party must have independent legal advice before signing
- Each lawyer must certify that they’ve explained the effects and implications of the agreement to their client
Skipping any of these steps can mean the agreement is challenged — or set aside entirely — if the relationship later breaks down. Courts also retain a discretion to set aside an agreement if giving effect to it would cause serious injustice, so it’s important the agreement is fair and properly explained at the time it’s signed.
Is a contracting out agreement right for you?
Every relationship and every set of circumstances is different. Some couples want a simple agreement that ring-fences one or two assets. Others want a comprehensive document covering everything from KiwiSaver to future inheritances. The right approach depends on your situation, your assets, and what you and your partner want to achieve.
If you’re considering a contracting out agreement — whether before your relationship begins or well into it — getting proper legal advice early makes the process smoother and gives both parties confidence that the agreement will hold up if it’s ever needed.
This article is general information only and does not constitute legal advice. If you are facing a commercial contract dispute, please get in touch to discuss your specific circumstances.