In New Zealand, a prenup is formally called a contracting out agreement, made under section 21 of the Property (Relationships) Act 1976. You are not legally required to have one, but without one the Act's equal sharing rules will generally divide relationship property 50/50 if you separate. Those rules apply to married couples, civil union partners, and de facto couples who have lived together for three years or more.
A contracting out agreement lets you and your partner decide for yourselves how property will be divided if the relationship ends, instead of leaving it to the default rules. It is the only reliable way to protect a home you owned before the relationship, a family business or farm, or an inheritance you expect to receive. To be binding, the agreement must be in writing, and each partner must receive independent legal advice before signing.
For couples in Marlborough, where vineyards, farms and family businesses are often the main asset, an agreement is frequently the single most valuable piece of legal planning a relationship can have.
What Is a Contracting Out Agreement?
A contracting out agreement is a written contract between partners that replaces the equal sharing rules in the Property (Relationships) Act 1976. Section 21 of the Act allows couples to agree on the status, ownership and division of their property, both what they own now and what they acquire later.
People call it a prenup because of American television, but the New Zealand version is broader. You can sign one before the relationship begins or at any point during it. Couples who have already separated can also record their property settlement in a similar agreement, although that is technically a settlement agreement made under section 21A of the Act rather than a contracting out agreement. The same formal requirements apply to both. It is never too late to put an agreement in place, although earlier is almost always cheaper and less stressful.
What Happens if I Don't Have One?
Without an agreement, the Property (Relationships) Act 1976 applies to married couples and civil union partners as soon as they marry or enter the union, and to de facto couples once they have lived together for about three years. Section 11 of the Act sets the starting point: relationship property is divided equally between the partners. There is one qualification: where a marriage or civil union ends within three years, known as a relationship of short duration, the family home and chattels are generally divided according to each partner's contributions rather than equally.
Relationship property usually includes:
- The family home and family chattels, whenever they were acquired. If you owned the house before the relationship and your partner moves in, the house generally becomes the family home and is shared equally on separation.
- Income and property acquired during the relationship, including KiwiSaver contributions made while you were together.
- Increases in the value of some separate property, in certain circumstances, including where the other partner contributed to the increase.
Separate property, such as property owned before the relationship, inheritances and gifts, can stay separate. In practice it often does not. When separate property is intermingled with relationship property, for example when an inheritance is paid into the joint mortgage, it can lose its protected status. The family home rule is the one that surprises people most: the home is shared equally even if one partner owned it outright before the relationship began.
Who Should Get a Contracting Out Agreement?
In our experience, an agreement is worth serious consideration if any of the following apply:
- You own a home before the relationship: once it becomes the family home, the starting point is equal sharing, regardless of who paid for it.
- You own or work in a family farm, vineyard or business: in Marlborough this is the most common reason couples come to see us. A relationship property claim against a vineyard or farming operation can force a sale or a crippling buyout.
- You expect an inheritance or family gifts: an agreement can ring-fence them even if they are later used for family purposes.
- You are entering a second relationship: particularly where you have children from a previous relationship whose inheritance you want to protect.
- There is a significant wealth difference between you: the three-year mark arrives faster than most couples expect.
- You are in a de facto relationship approaching three years: after that point, the Act applies in full.
What Makes a Prenup Legally Binding in New Zealand?
Section 21F of the Property (Relationships) Act 1976 sets strict formal requirements. A contracting out agreement is void unless all of the following are met:
- The agreement is in writing and signed by both partners.
- Each partner receives independent legal advice before signing. You cannot use the same lawyer.
- Each signature is witnessed by that partner's lawyer.
- The witnessing lawyer certifies that they explained the effect and implications of the agreement before it was signed.
These are not technicalities. An agreement that misses any of these steps is void, although section 21H gives the court a limited power to validate a non-complying agreement where the non-compliance has not materially prejudiced anyone. Relying on that discretion is a gamble no one should plan around.
Can a Prenup Be Overturned?
Yes, but the bar is high. Under section 21J of the Act, the court can set aside a contracting out agreement if giving effect to it would cause serious injustice. The court looks at the circumstances when the agreement was made, whether it was fair at the time, the time that has passed, and whether the agreement has become unfair because of changes in the couple's circumstances, among other factors.
The fact that one partner simply got a better deal is not enough on its own. The threshold is serious injustice, and courts have repeatedly emphasised that they will not lightly interfere with agreements freely entered into with proper advice.
"The agreements that survive are the ones that were fair when they were signed and have been kept up to date. An agreement signed a week before the wedding, under pressure, that leaves one partner with nothing after twenty years and three children is exactly the kind of agreement a court will look hard at. We recommend reviewing your agreement every three to five years, and after every major life event: a child, a business sale, an inheritance."
— Sarah Wadworth, Special Counsel, Lane Neave
How Much Does a Prenup Cost in NZ?
In our experience, a straightforward contracting out agreement typically costs in the region of $2,000 to $5,000 in total legal fees across both partners, reflecting the requirement that each partner has their own lawyer. Agreements involving trusts, companies, farms or vineyards cost more because the asset structures take longer to document properly.
That cost needs to be weighed against the alternative. A contested relationship property dispute can easily run to tens of thousands of dollars in legal fees, and the outcome of the default 50/50 rules can be dramatically different from what either partner assumed.
When Should We Sign One?
The best time is before you move in together or marry, when the conversation is hypothetical and no one is under pressure. Agreements signed on the eve of a wedding are more vulnerable to being set aside, because pressure and lack of time undermine the fairness of the circumstances in which the agreement was made.
If you are already living together, the next best time is now, before the three-year mark. And if you are already past it, an agreement is still effective; it simply needs to deal honestly with entitlements that may already have accrued.
Key Takeaways
- The default is equal sharing. Without a contracting out agreement, the Act's equal sharing rules generally divide relationship property 50/50. They apply to marriages and civil unions from day one, and to de facto relationships after three years, with modified rules for relationships of short duration.
- The family home is shared equally even if one partner owned it before the relationship.
- Formalities are strict. The agreement must be written and signed, and each partner must have independent legal advice, with a lawyer's certificate.
- Fairness matters over time. Courts can set agreements aside for serious injustice, so regular reviews matter as much as signing.
- Get advice early. An agreement is far cheaper than a dispute.
Frequently Asked Questions
Is a prenup legally enforceable in New Zealand?
Yes. A contracting out agreement made under section 21 of the Property (Relationships) Act 1976 is enforceable, provided it meets the formal requirements in section 21F: written form, signatures, independent legal advice for each partner, and lawyer certification. A court can set it aside only where enforcing it would cause serious injustice.
Can we make an agreement after we are already married or living together?
Yes. Contracting out agreements can be made before or at any time during a marriage, civil union or de facto relationship. Couples often sign them years into a relationship, commonly when a house is bought, an inheritance arrives, or a business is established.
Does a prenup protect an inheritance?
It is the most reliable way to do so. Inheritances are separate property under the Act, but they lose that status if intermingled with relationship property, such as being paid into a joint account or the mortgage on the family home. An agreement can preserve the inheritance's separate status even where it is used for family purposes.
What happens to a de facto couple's property before three years?
For de facto relationships of short duration, generally under three years, the default position is that the Act's division rules do not apply at all. Each partner keeps the property they legally own. Under section 14A, a court can only divide relationship property if there is a child of the de facto relationship, or the applicant has made a substantial contribution to the relationship, and in either case the court must also be satisfied that failing to make an order would result in serious injustice. Where an order is made, each partner's share is determined by their contribution to the relationship, not equally.
Do we each really need our own lawyer?
Yes. Independent legal advice for each partner is a strict statutory requirement under section 21F. One lawyer cannot act for both of you, and skipping this step makes the agreement void.
