The Effect of Contracting Out Agreements (“Pre-Nups”) on Intestacy

There’s an old saying “Where there’s a will there’s a family”. In our experience as property and estate planning lawyers, that’s very true! But what happens when there is no will and 2 families - a new de facto partner and 2 children to a previous marriage – as well as a contracting out agreement? That’s when it can get really messy.

Blended families are becoming much more common in today’s society. Many individuals who have children from a prior relationship are entering into contracting out agreements when they re-partner with the best intentions: to ensure their assets pass to their children when they die. But is a contracting out-agreement alone enough?

The Court of Appeal has recently delivered an important decision in Rimmer v Wilton [2025] NZCA 374, which clarifies how contracting out agreements under the Property (Relationships) Act 1976 (“the PRA”) interact with entitlements under the Administration Act 1969 when one of the parties dies intestate (without a valid will).

Background

David Rimmer died in 2016 without a will. He left behind his de facto partner, Carolyn Wilton, who he had been with since 2000, as well as his two adult children from a prior relationship, Nigel and Nicola Rimmer.

In 2002, Mr Rimmer and Ms Wilton had entered into a contracting out agreement (“the Agreement”) under s 21 of the PRA (a “pre-nup”). The Agreement defined certain property as separate property, recorded their home (which was owned by them as tenants in common in equal shares) as relationship property, and granted the survivor a lifetime right to occupy that home.

Following Mr Rimmer’s death, Ms Wilton elected Option B under the PRA, meaning she did not seek a division of relationship property but instead claimed her entitlements under the intestacy provisions of the Administration Act, which were as follows:

• All of Mr Rimmer’s personal chattels (the definition of which is quite broad in the Administration Act, and includes things like vehicles, domestic animals, furniture, jewellery, art and clothing, amongst other things); and
  
  
• The “prescribed amount” of $155,000.00 plus interest from Mr Rimmer’s remaining assets (once sold or otherwise converted into cash); and
  
  
• One third of what was left, following the payment outlined above. The remaining two thirds would have been payable to Mr Rimmer’s two children.
  
  

Ms Wilton obtained letters of administration, allowing her to administer Mr Rimmer’s estate.

At the time of his death, Mr Rimmer’s half share in the property which he owned with Ms Wilton, was the most valuable part of his estate, however this was subject to the life interest granted to Ms Wilton in the Agreement. His remaining liquid assets were close to, but fell short of, the prescribed amount of $155,000.00, which a de facto partner or spouse is entitled to in priority to the deceased’s children under the intestacy provisions.

Ms Wilton distributed the estate’s liquid assets to herself. She also continued to live in the property, in reliance on the life interest the Agreement provided. No distribution was made to Mr Rimmer’s children, as there were insufficient liquid assets to pay the prescribed amount (plus interest) to Ms Wilton.

Mr Rimmer’s children challenged Ms Wilton’s actions in the High Court. The High Court rejected the argument put forward by Mr Rimmer’s Children, holding that Ms Wilton was entitled to rely on both:

• her rights under the Agreement, and
  
  
• her statutory entitlements as the surviving partner under intestacy.

The Court found no breach of duty by Ms Wilton in her role as administrator.

Court of Appeal Decision

On appeal, Mr Rimmer’s children advanced a new argument: that the Agreement entirely excluded Ms Wilton from any intestacy entitlements.

The Court of Appeal disagreed. It held that while the Agreement comprehensively defined separate and relationship property and provided a life interest in the home, it did not expressly exclude Ms Wilton’s entitlement under intestacy law. Clear words in the Agreement would have been required to override the statutory scheme in the Administration Act.

Accordingly:

• Ms Wilton was entitled to her share of Mr Rimmer’s estate under the intestacy rules in the Administration Act in addition to her rights under the Agreement.
  
  
• The appeal of Mr Rimmer’s children was dismissed.
  
  
• Costs were awarded to Ms Wilton, payable from the estate.

Key Takeaways

• A contracting out agreement under s 21 of the PRA can determine ownership and division of property between partners, including on death. However, unless expressly stated, contracting out agreements do not prevent a surviving partner from also claiming intestacy entitlements under the Administration Act if one partner dies without a will.

• Contracting out agreements and estate planning often overlap. Getting thorough legal advice on and executing both a contracting out agreement and a valid will simultaneously will help to ensure your wishes are carried out and reduce the risk of family disputes relating to your estate in future.

• Always have a will. Without one, the law decides how your estate is divided, and this may not reflect what you want.

If you’re in a relationship and own property, or if you don’t yet have a will, now is the time to act. Our team of property and estate planning lawyers can help you put thorough contracting out agreements and estate plans in place, so your loved ones are looked after, and your wishes are respected.

Emily Robertson, Senior Solicitor
emily@mcmillanco.nz