In the first article of this series, we introduced the 3 key steps you must take before signing the contracting out agreement for it to be valid:
- Independent lawyers
- Disclosure
- Advice
In this article we look more closely at Step 2 – Disclosure.
It is essential for both parties to fully disclose all assets and liabilities. This includes properties, bank accounts, investments, Kiwi saver, and any debts. Failure to provide a complete financial picture can affect your lawyer’s advice to you and lead to potential disputes in the future. There is a risk the Court may even overturn the agreement if significant property is not disclosed.
Your lawyer needs to know what property you each own to assess how it is treated under the Act and advise you on how the agreement will affect your rights and the implications if property is divided under the agreement. *Hot Tip* Make a list of your assets and liabilities with their values and share it with your lawyer early on to speed things up and reduce costs. This also ensures no property is left out, as any property not covered by the agreement will be divided under the Act.
Disclosing assets and liabilities not only fosters trust between partners but also ensures that both parties can make informed decisions. It helps in crafting a fair agreement that accurately reflects the financial realities of the relationship. Moreover, in the event of a relationship breakdown, a transparent agreement can prevent lengthy and costly legal battles.
Kerry Bowler, solicitor
In the first article of this series, we introduced the 3 key steps you must take before signing the contracting out agreement for it to be valid:
- Independent lawyers
- Disclosure
- Advice
In this article we will look more closely at Step 1 – Independent lawyers.
Does that mean we just get two different lawyers?
Not only does this mean you each need separate lawyers for the contracting out agreement, but those lawyers should also be at separate firms. And it goes even further, the lawyer advising you should not have previously acted for your partner either. This ensures that the lawyer who is advising you does not owe any ongoing duties to your partner as a client that would conflict with the lawyer’s duties to you as a client. In some circumstances the lawyer may still be able to act for you, if you and your partner give fully informed consent.
So how does it benefit you?
The RPA states that the agreement is void unless you receive advice from an independent lawyer.
Your legal interests in protecting certain assets against a relationship property claim will often differ from your partner’s legal interests on separation. Having an independent lawyer protects you and ensures the advice you receive is about how the agreement will affect your rights and what the implications are for you, independently of your partner’s interests in contracting out. It can help ensure the agreement is future proofed, reducing your legal costs for updating the agreement as your relationship develops, and significantly reduces the risks of having the agreement overturned by a Court for being seriously unjust.
Next time Step 2 – Disclosure (and a hot tip on how to reduce your legal costs!)
Kerry Bowler, solicitor