“Once bitten, twice shy”. This might be how someone thinks who has been through a costly division of property with their former spouse/partner – and to avoid it a second time, well, do you put your house in a trust or what?
In a recent Christchurch Family Court case, the man’s house got put into a trust when the new relationship was in its very early stages. Things didn’t work out and several years later there was an argument in court - was putting the house into a trust done to defeat the interests of the new partner? The house owner took the view that having just come out of a 26 year relationship he was not looking for a serious relationship straight away, he was not in a serious relationship and it was “early days”.
There was a lot of detailed evidence which the Judge looked at. Every case will be different but in this case the Judge decided that although it was very early in the relationship, there was “a clear and present intention to become parties to a de facto relationship”. The result was that the transfer to the trust did not work!
So, what should he have done? In this scenario, a contracting out agreement would have been a more effective solution. Although it might feel uncomfortable to discuss potential breakups, having a clear plan can actually strengthen the relationship by promoting transparency and trust. Think of a contracting out agreement as similar to house insurance: it doesn’t imply that you expect disaster, but it provides protection if something unforeseen happens. When done properly, with full and through legal advice it can safeguard both partners' interests and make any future separation easier to navigate.
The key takeaway here is that proactive planning, whether that be through a trust set up at the correct time (prior to a relationship), or a contracting out agreement, we can help protect assets and offer peace of mind, enabling couples to focus on their relationship rather than worrying about potential pitfalls down the road.
Real people. Real solutions. Real advice.
