Edmonds Judd

pre-nup

Customs officials seize goods at Aotearoa New Zealand’s ports of entry every day, from fruit and veg and animal parts to firearms and illegal drugs. But one thing we don’t expect to be stopped at the border is the validity of pre-nuptial agreements from overseas.

 

Hundreds of thousands of migrants come to our shores every year in search of pastures new. Many of these migrants, particularly those who come from a country with a similar legal system, will have relationship property agreements that were drawn up and signed in their home countries. It may come as some surprise to these folks that their legal documents won’t necessarily be upheld by our courts.

 

This is where you might be tapping your forehead as you triumphantly exclaim “Aha! But section 7A of the Property (Relationships) Act 1976 says that agreements from overseas are valid here!”

 

Well yes, sometimes they are. The Act provides that, if spouses have agreed in writing that the property law of a country other than New Zealand is to apply, and if their agreement is valid according to the laws of that country, then the Act will not apply. However, the courts have been slow to give blanket authorisation to every such agreement. One example is a classic South African ante-nuptial agreement designed to opt-out of the accrual system in South Africa. Previously the courts have said that this kind of agreement is designed to opt-out of South African property law alone, and that it is not designed to apply the world over.

 

There are quite a few different factors the courts will consider when deciding whether to uphold a foreign relationship property agreement. One of these is a requirement that the agreement expressly invokes the application of foreign law. This can be a problem because so few relationship property agreements anywhere in the world are drafted to apply outside of the country in which they are signed.

 

This is where your alarm bells might be going off. How is a couple in say, South Africa, who might have no idea that they will migrate to New Zealand in a few years’ time, supposed to know and contemplate how our relationship property laws might apply? It’s a headache they don’t know they will have!

 

If you have a contracting out agreement, pre-nuptial agreement, pre-marital agreement or antenuptial agreement from overseas and you think there is even the slightest chance that you may need to rely on it, then seek independent legal advice. Edmonds Judd can help advise you on whether the courts are likely to uphold it or if a new agreement should be entered into (assuming you and your spouse both agree). In New Zealand, contracting out agreements can be entered into before or during the de facto relationship or marriage, but bear in mind that legal entitlements may be quite different under New Zealand law.

 

Jamie Graham


In this article we look more closely at Step 3 – Advice.

 

Once your lawyer has the details of all property owned by each of you they can assess what your rights would be if that property were divided under the RPA, and provide you with advice on how the agreement affects your property rights and the implications for you if property were divided under the agreement.

 

Why do I need advice on rights under the RPA if it’s just 50/50 and I’m contracting out?

This is where the law jumps in and says “woah there, partner! There’s a lot more to it (131 pages to be precise), so you should definitely get legal advice to check it’s what you want first”.

 

It is important that you fully understand your current property rights under the RPA before agreeing to change or give up those rights.  The starting point for under the RPA is that relationship property will generally be divided equally between partners in a qualifying relationship.  However, this is just a presumption, not a rule set in stone. There are numerous exceptions and adjustments within the RPA that can alter how property is divided based on the specific circumstances of your relationship.  Even the most experienced relationship property lawyers can find the RPA complex. That’s why seeking legal advice is essential before making any decision to contract out of the RPA.

 

Great, now you’ve had advice and know what your actual property rights are under the RPA, let’s compare that to your position under the contracting out agreement.

Even if you’re planning on entering into a contracting out agreement with the intention of maintaining a 50/50 split, it’s important to realise that the implications could be far-reaching.  Property rights, financial arrangements, estate planning, and even third-party property rights (such as those held in trusts or companies) can all be affected.  The agreement might impact more than you expected.  (*Hot tip* now is a good time to consider whether you should create or update your will as it works hand-in-hand with your contracting out agreement)

Your lawyer will be able to assess your specific situation and help you understand how the contracting out agreement compares to your rights under the RPA. They can guide you through the various consequences and ensure you’re fully informed before agreeing to anything.

 

But wait!!! It’s not enough just to receive legal advice—you need to understand it. Ensure your lawyer explains the details and feel free to ask lots of questions, we love to know you are thinking about how this all applies to you.

 

If you’re satisfied with the advice and understand the implications, it’s time to book an appointment with your lawyer to sign that contracting out agreement. This step is crucial to ensure your rights are protected and your intentions are clearly outlined.

Kerry Bowler, SolicitorKerry 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:

  1. Independent lawyers
  2. Disclosure
  3. 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, SolicitorKerry 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:

  1. Independent lawyers
  2. Disclosure
  3. 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, SolicitorKerry Bowler, solicitor


Three key steps before signing

There are many reasons for couples to contract out of the equal sharing provisions of the Relationship Property Act (RPA).

You and your partner are off to have the lawyer draw up a quick document and sign it.  But the law says, “Woah there, partner! There’s a lot more to it (131 pages to be precise!), you should definitely get legal advice to check it’s what you want first.”

The RPA states that your contracting out agreement is void unless before you sign, you receive advice from an independent lawyer on the effects and implications the agreement has on your property rights under the RPA.

There are three key steps you must take before signing a contracting out agreement for it to be valid:

  1. Independent lawyers: You must each have your own independent lawyer. Generally, this means the lawyer advising you on contracting out should not have previously acted for your partner.
  2. Disclosure: Through lawyers you and your partner exchange statements showing balances and values of all assets and liabilities. If significant property is not disclosed there is a risk that a court could overturn the agreement.
  3. Advice: Once your lawyer has the details of all property owned by each of you, they can assess what your rights would be if that property were divided under the RPA. They can then provide you with advice on how the agreement affects your property rights and the implications for you if property was divided under the agreement.

This article is the first in a series of four by litigation solicitor, Kerry Bowler.

 

 

Kerry Bowler, solicitor