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Contracting Out Agreements are held to be void for inadequate advice

Contracting Out Agreements (Pre-nups) can be held void if your lawyer (or your partner’s lawyer) has not obtained adequate information. Adequate information means knowing all the information about you and your partner’s financial situation.  This includes property (family home, rental properties and/or holiday homes), bank accounts, superannuation, shares, businesses, vehicles, student loans, wages, and debts.  It is also important to know if either of you are a beneficiary of a Trust.

Courts have held Contracting Out Agreements void where the lawyer did not properly ascertain the extent of the property.  This is because not ascertaining what the assets and debts comprise, the lawyer cannot ascertain how these would be divided on separation if the agreement were signed compared with how they would be divided if not signed.  This means that the lawyer cannot give advice on whether the agreement should or should not be signed.

Courts are even more stringent on obtaining adequate information when couples have been in a relationship for more than 3 years.  This is because after 3 years, couples have already gained entitlements under the Property (Relationships) Act and couples need to know what they may be giving up under the proposed Contracting Out Agreement.  The only way a lawyer can give adequate advice is to obtain full disclosure as to the nature and value of the assets and debts.

There have been plenty of cases in New Zealand where Contracting Out Agreements have been found void for not obtaining adequate legal advice.  Adequate legal advice requires the lawyer to advise you on the effects and implications of the Agreement and the wisdom of entering into it.  It is not possible to provide such advice without knowing what all the assets and debts are.

That is why I ask for all the information including all bank statements, student loans, and superannuation accounts in your name and your partner’s name, showing funds as at today’s date.  That is why I also search the company register to discover if either or both of you own shareholdings.  I also complete a title search on Land Information New Zealand to discover what properties are owned by either/both of you.  I will also ask you many questions to be sure I have the full picture. 

I seek full disclosure to ensure that the Contracting Out Agreement is valid and cannot be overturned by a court in the future. 

The purpose of a Contracting Out Agreement is to provide you with clarity and security for your future.  If I did not seek full disclosure, you would not have the peace of mind that your assets are protected.