Contracting Out Agreements in New Zealand: A Guide for Business Owners
If you are a business owner in New Zealand, you may have heard of contracting out agreements. Also known as prenuptial agreements or relationship property agreements, contracting out agreements are legal documents that can be used to protect your business assets in the event of separation or divorce.
In this article, we will look at the basics of contracting out agreements in New Zealand, including what they are, why they are important, and how they work.
What is a Contracting Out Agreement?
A contracting out agreement is a legal document that outlines how property and assets will be divided in the event of a separation or divorce. It is an agreement that is entered into voluntarily by both parties, and is based on the principle of freedom of contract.
In New Zealand, contracting out agreements are governed by the Property (Relationships) Act 1976. This act sets out the rules for how relationship property is divided in the event of a separation or divorce, and allows parties to contract out of these rules if they wish to do so.
Why are Contracting Out Agreements Important?
For business owners, contracting out agreements can be particularly important. This is because the Property (Relationships) Act treats business assets as relationship property, meaning that they are subject to the same rules as other property that is owned jointly by the parties.
This can be problematic for business owners, as it can mean that their business assets are at risk if they become involved in a relationship that ends in separation or divorce. A contracting out agreement can help to protect these assets, by allowing parties to agree on how they will be divided in the event of a separation or divorce.
How Do Contracting Out Agreements Work?
To enter into a contracting out agreement, both parties must obtain independent legal advice. This means that each party must have their own lawyer, who will explain the implications of the agreement and make sure that it is fair and reasonable.
Once the parties have obtained legal advice, they can sign the agreement. The agreement must be in writing, and must be signed by both parties in the presence of their lawyers.
Contracting out agreements can be entered into at any time, either before or during a relationship. However, it is important to note that the agreement cannot be challenged in court unless there has been a material change in circumstances since it was signed.
Conclusion
Contracting out agreements can be an effective way for business owners to protect their assets in the event of separation or divorce. By allowing parties to agree on how property will be divided, these agreements can help to provide certainty and stability for businesses and their owners.
If you are a business owner in New Zealand, it is worth considering whether a contracting out agreement could be beneficial for you. To find out more, speak to a lawyer who specialises in relationship property law.