Reviewing your Contracting Out Agreement
Have You Reviewed Your Contracting Out Agreement Recently?
Contracting Out Agreements (also known as “pre-nuptial” agreements) are used to protect your assets.
When parties sign a Contracting Out Agreement, they confirm that certain assets will remain separate property and not become relationship property if a separation occurs. Without a Contracting Out Agreement, if parties separate after three or more years together (or earlier under some exceptions), all assets and liabilities are deemed relationship property. This means they are to be equally divided between both parties.
It is important to remember that a Contracting Out Agreement is intended to be a “living” and “evolving” document – not just an Agreement signed and forgotten about! You should aim to review the Agreement after a significant life event (ie. marriage or children) or every few years.
To forget to review the Contracting Out Agreement could leave it open to being challenged in Court and possibly overruled. The effect of this could be disastrous if you have savings, valuable assets, businesses, or a family trust that you don’t intend to share upon separation!
How Do I Review My Contracting Out Agreement?
A “review” can be conducted by discussion between the parties informally. However, we recommend you contact your respective legal Counsel who can record the fact a review has been completed and that you have both agreed that the document remains fair and you are happy with the content
If you engage legal counsel to record the review and the document is later challenged in Court, you have evidence that the Agreement has been considered since it was made and agreed upon as fair. This provides confirmation for the Court.
There have been cases where a Contracting Out Agreement has been held invalid by the Court as it is no longer considered fair. There are many reasons an agreement may become unfair… perhaps one partner has given up their career to raise children, or assets have been purchased and maintained by one party. The Contracting Agreement will need to be changed, if this is the case.
What If A Change is Needed?
It is important to note a Contracting Out Agreement cannot be varied informally – this needs to be recorded in a Variation to the Contracting Out Agreement which legal Counsel for you and your partner will be involved with. If you do not do so, changes are not effective, and the original Agreement remains in place. Even if you agree on the changes verbally, they need to be recorded in a written and signed variation to be valid.
Where Do I Start?
If you would like to know more about implementing a Contracting Out Agreement to protect your assets, reviewing, or varying a Contracting Out Agreement, please contact our friendly family law team at Pier Law. We are happy to discuss the requirements with you and ensure your assets are well-protected.
Article written by Casey Walters.