Kerikeri, New Zealand

Tel: 09 407 7099   /   Email:


Thu, 27 October 2016

Contracting out agreements - looking after the kids - insurance for the kids - Tue, 11 October 2016


I’ve written a few short pieces on the different scenarios to get a contracting out agreement (known in most of the western world as the dreaded ‘pre-nup’). Perhaps the most common claim clients make (and to be honest I believe it), is that that want an agreement to protect their kids – to ensure that if they break up the property they have won’t be ‘taken’ by the new partner, so that their children can benefit in the future. These are always cases where the client has had a previous relationship and has children from that first relationship. So let’s have a few case studies (names have been made up).


First of all we have Tina and Tommy – a couple of Northland locals. The two T’s both have children from their previous relationships. Tina and Tommy both came out of the prior relationships with some cash – Tina has $300,000.00 and Tommy has $100,000.00. They enter into an agreement which records that this property shall remain separate. They also agree that their bank accounts, future income, vehicles etc shall remain separate. Five years into their relationship they purchase a house. They put their separate property into the house and have a small mortgage. The agreement protects them – the equity in the house is separate property - $100,000.00 for Tommy and $3000,000.00 for Tina. The $100,000.00 mortgage is a joint debt. Five years later they separate. They sell the house, Tommy takes his $100,000.00, Tina takes her $300,000.00, the mortgage is repaid and the rest is split. Their relationship ends and their capital is protected.


Now we have Billy and Bobby, another couple of locals from Northland. Again, the two B’s have children from their previous relationships. They both came out of their previous relationship with some cash - $300,000.00 Billy and $100,000.00 Bobby. Just like Tina and Tommy the two B’s buy a house after five years, then separate after another five. However, unlike the two T’s, the two B’s didn’t sign a pre-nup. What happens? You should know the answer by now. After the house sells each B receives $200,000.00 of the equity – Billy’s share has gone down $100,000.00 and Bobby’s has gone up $100,000.00. She has cut her capital in half and he has doubled his. Or another way of looking at it, Billy has just given her ex-partner’s children another $100,000.00 for their future, at the expense of her own children.

This is an extremely simple problem to avoid. It is not difficult to enter into an agreement to protect yourself, and your children. Again, it is a form of relationship insurance. You pay a fee (somewhere between $1,200.00 + gst, and $1,600.00 + gst) and you are ‘locked in’ for the entire relationship. In my opinion that’s a small price to pay – especially when you think how much we all spend on insurance for our houses, lives, contents, cars etc.


If you have any questions about contracting out agreements – any questions at all – I would be happy to talk to you. You can either call me at work: (09)4077099, email me at, or if you are in Kerikeri, come into the office for a chat – next to McDonalds and above Pagani.

Law North Limited – local lawyers looking after Far North people: Kerikeri, Kaikohe, Paihia, Opua, Okaihau, Kaeo, Kaitaia, Whangarei – and everywhere else in between.

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