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Telling Your Partner You Want A Contracting Out Agreement (PreNup)

Bringing up the idea of a contracting-out agreement (prenup) in New Zealand can be a delicate conversation, but it’s an important one if it reflects your values and financial goals. Here are some practical tips on how to approach this discussion:

1. Choose the Right Time and Place

• Avoid bringing it up during stressful moments or arguments. Find a relaxed, private setting where you both have time to talk openly.

2. Frame It as a Practical Decision

• Emphasize that it’s about planning for the future, not doubting the relationship. You can say something like, “I think it’s wise to have everything sorted legally, just in case life takes unexpected turns.”

3. Explain the Context

• Mention that New Zealand’s Property (Relationships) Act 1976 automatically divides assets 50/50 after three years of living together or marriage unless a contracting-out agreement is in place.

• Share that the agreement gives you both the ability to decide how assets will be handled rather than leaving it to default laws.

4. Focus on Fairness

• Reassure your partner that the agreement isn’t about benefiting one person over the other but creating clarity and fairness.

• Highlight that it protects both parties and prevents misunderstandings in the future.

5. Use “We” Language

• Avoid making it sound like it’s only about your assets. For example: “I think we should work on something that feels fair to both of us.”

6. Be Honest About Your Reasons

• If you’ve inherited assets, own a business, or have children from a previous relationship, explain that these are factors you need to consider.

• Transparency builds trust.

7. Encourage Independent Legal Advice

• In New Zealand, both parties need to receive independent legal advice for the agreement to be valid. This ensures that neither of you feels pressured and that both of your interests are protected.

8. Acknowledge It Can Be Emotional

• Understand that your partner may feel hurt or unsure. Let them express their thoughts, and listen with empathy.

• You might say, “I know this might feel uncomfortable, but it’s about planning responsibly, not questioning our relationship.”

9. Consider Professional Guidance

• If the conversation feels too difficult to have alone, consider discussing it with a mediator, counselor, or financial advisor together.

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​What are the proposed changes to succession law in New Zealand?

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In December 2021, the New Zealand Law Commission presented a comprehensive report to Parliament recommending significant reforms to the country's succession laws. These recommendations aim to modernize and simplify the legal framework governing inheritance, ensuring it aligns with contemporary societal values and family structures.

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Key Proposed Changes:

1. Introduction of a New Inheritance Act: The Commission suggests enacting the "Inheritance (Claims Against Estates) Act" as the primary legislation governing entitlements and claims against estates. This Act would replace outdated laws, providing a clearer and more accessible legal structure.

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2. Rights of Surviving Partners: The proposed reforms maintain the rights of surviving partners to claim a division of relationship property upon their partner's death, ensuring fair distribution of assets accumulated during the relationship.

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3. Intestacy Rules Revision: For cases where an individual dies without a will, the recommendations advocate for revising the distribution rules. Notably, if all children are from the current relationship, the surviving partner would inherit the entire estate. In blended families, the estate would be divided equally between the surviving partner and the deceased's children from previous relationships.

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4. Claims by Children and Grandchildren: The Commission presents two options regarding claims against an estate by children and grandchildren:

   • Option One: Only children under 25 or those with disabilities can claim if not adequately provided for.

   • Option Two: Children of any age can claim if the deceased unjustly failed to recognize or provide for them.

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5. Recognition of Stepchildren: The reforms propose that stepchildren under 25 should have the right to contest a stepparent's will, expanding their ability to claim beyond the current limitation to dependent stepchildren.

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6. Tikanga Māori in Succession: The recommendations emphasize that succession concerning taonga (treasured possessions) should be determined by tikanga Māori (Māori customs), acknowledging the importance of cultural practices in inheritance matters.

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7. Addressing Trusts and Asset Transfers: To prevent individuals from circumventing claims by transferring assets into trusts or joint ownerships, the Commission suggests empowering courts to recover such property, ensuring estates have sufficient assets to meet legitimate claims.

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8. Efficient Dispute Resolution: The proposed changes aim to support both in-court and out-of-court dispute resolution processes, promoting timely and effective settlements of inheritance disputes.

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These recommendations are currently under governmental consideration, and any legislative changes will undergo the standard parliamentary process before implementation. It is important to note that the sentiment of these changes can be used now. It is a relevant consideration now what the current societal attitudes are towards succession law.  

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Why is Legal Capacity and Will Validity Important in New Zealand?

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Legal capacity is crucial in New Zealand’s succession law because a will must reflect the true intentions of the person making it (the testator). If the testator lacked mental capacity at the time of making or altering their will, it may be declared invalid, leading to disputes among beneficiaries and potential application of intestacy laws.

Key reasons why mental capacity and will validity are important include:

1. Protection of Vulnerable Individuals

   • Older adults, particularly those suffering from dementia or other cognitive impairments, may be susceptible to undue influence or manipulation.

   • Ensuring they have the capacity to make informed decisions prevents coercion and fraud.

2. Avoiding Family Disputes

   • If a will is unclear or suspected to have been made under diminished capacity, it can result in costly and emotional legal battles among family members.

   • Resolving such disputes can deplete the estate’s value through legal fees.

3. Ensuring Testamentary Freedom

   • Every individual has the right to distribute their estate as they see fit, but that right is only valid if they fully understand their decisions at the time of making the will.

   • A lack of capacity may mean that their final wishes are not properly respected.

4. Legal and Financial Consequences

   • If a will is declared invalid, an earlier valid will may take precedence, or the estate may be distributed under the Administration Act 1969 (intestacy rules).

   • This could mean assets go to unintended beneficiaries.

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How Can Someone Challenge a Will Based on Mental Incapacity?

If someone believes a will is invalid due to the testator’s lack of capacity, they can contest the will through the New Zealand High Court. The process generally involves the following steps:

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1. Gather Evidence of Mental Incapacity

   • Medical records: If the testator was diagnosed with dementia, Alzheimer’s, or another mental illness, this could be key evidence.

   • Doctor’s statements: A doctor or specialist who treated the testator may provide an opinion on their capacity at the time the will was made.

   • Witness testimony: Lawyers, family members, or caregivers who were present when the will was signed can provide statements on the testator’s mental state.

2. Obtain Legal Representation

   • A lawyer experienced in estate litigation will help assess the strength of the claim and file the necessary court documents.

3. Apply to the High Court

   • A formal challenge is made in the High Court, and the person challenging the will (the plaintiff) must prove that the testator did not have the required mental capacity at the time of making the will.

4. Court Examination of Capacity

   • The court considers the Banks v Goodfellow test, a long-established legal test that determines testamentary capacity. To be valid, the testator must have been able to:

     • Understand the nature and effect of making a will

     • Recall what property they own

     • Recognize potential beneficiaries and their claims

     • Make decisions free of delusions or undue influence

5. Potential Outcomes

   • Will declared valid: If the court finds the testator had capacity, the will stands.

   • Will declared invalid: The court may reinstate a previous will or distribute assets under intestacy laws.

Challenging a will on mental incapacity is complex and requires strong medical and legal evidence, but it is a critical safeguard to ensure that only genuine, informed testamentary decisions are upheld in New Zealand succession law.