Relationships, the property they create and the property each party has brought into the relationship separately can be a delicate and awkward subject especially if the relationship is just starting out. Once a relationship has existed for three years the Property (Relationships) Act 1976 determines that if the parties were to separate (whether they be married, joined by civil union or in a de facto couple) then their property is to be divided in equal shares. Some couples may see the law as being unfair in their particular circumstances and may wish to protect what they have earned or inherited in the event of a separation.
Contracting Out Agreements (commonly known as “prenuptial” or “relationship property” agreements) are a legally binding document designed to enable parties to predetermine how their property and assets will be divided in the event of a separation or upon death. The agreement can provide a clear roadmap, reducing ambiguity and potential conflicts during what can be an emotional time.
We recommend entering into a Contracting Out Agreement for the following reasons:
- Preservation of personal assets and financial security: – Individuals entering a relationship with pre-existing assets or inheritances can use Contracting Out Agreements to safeguard these assets in the event of a separation.
- Avoiding Lengthy Legal Battles: – Contracting Out Agreements can expedite the separation process, minimising the emotional toll that a separation can take. It can also reduce the time and expense associated with lengthy legal battles.
- Protection of Business Interests: – Clearly outlining the status of business assets can shield an enterprise from the potential fallout of a relationship breakdown.
- Preserving Family Harmony: – By addressing financial expectations and responsibilities beforehand, Contracting Out Agreements can contribute to maintaining family harmony. Open communication and clarity can prevent misunderstandings that may strain relationships.
- Flexibility: – These agreements offer a flexible framework that allows couples to define their own rules and expectations. This flexibility can adapt to different relationship dynamics and the agreement should be reviewed regularly to ensure it remains relevant over time.
Contracting Out Agreements offer a proactive and strategic approach to managing the financial aspects of personal relationships. Our dedicated legal team is committed to guiding clients through the process, tailoring agreements to their unique circumstances. For personalized advice reach out to Evans Henderson Woodbridge on 06 327 7159.
