Contracting Out Agreements and Death: What Rimmer v Wilton Means for Estate Planning

Key Takeaways

A recent Court of Appeal decision has confirmed that a surviving partner may be entitled to both an inheritance and the benefits of a contracting out agreement (sometimes also referred to as a pre-nup). The Supreme Court will now consider whether that approach is correct.

The Background

Contracting out agreements under section 21 of the Property (Relationships) Act 1976 (PRA) are commonly used to determine how property will be treated if a relationship ends. However, they can also have important consequences on death.

A recent Court of Appeal decision, Rimmer v Wilton[1], highlights how contracting out agreements can affect the rights of a surviving partner and the beneficiaries of an estate.

Mr Rimmer and Ms Wilton had been in a de facto relationship for approximately 16 years when Mr Rimmer died in 2016.

Early in their relationship, they purchased a home together and entered into a contracting out agreement under section 21 of the PRA. The agreement provided that the property would be owned by them as tenants in common in equal shares and that, on the death of one partner, the survivor would have the right to occupy and use the deceased's share of the property for the rest of their life.

Mr Rimmer died without leaving a will. He was survived by Ms Wilton and two adult children from a previous relationship. At the time of his death, his estate consisted mainly of cash, personal assets and his half share of the home.

When a partner dies, the surviving spouse or partner must choose whether to:

• apply for a division of relationship property under the PRA (Option A); or
• take their entitlement under a will or, where there is no will, under the intestacy provisions (Option B).

Ms Wilton elected Option B and received her entitlement under the intestacy provisions. She also relied on the contracting out agreement, including her right to occupy and use Mr Rimmer's share of the home.

Mr Rimmer's children argued that Ms Wilton should not be able to benefit under both the contracting out agreement and the intestacy provisions. If she could, there was a real possibility that little or nothing would remain available to them from their father's estate.

The Court of Appeal's Decision

The Court of Appeal rejected the children's arguments.

The Court found that, unless a contracting out agreement clearly provides otherwise, a surviving partner may be entitled to both:

• the benefits available under the contracting out agreement; and
• their entitlement under a will or under the intestacy provisions.

Importantly, the Court held that Ms Wilton was entitled to enforce her rights under the contracting out agreement, including her lifetime right to occupy and use the couple's relationship property (and the sale proceeds derived from it), in addition to her entitlement under the intestacy provisions, despite having elected Option B following Mr Rimmer's death.

The Court considered that electing to take an inheritance does not automatically bring a valid contracting out agreement to an end.

Supreme Court Appeal

The children have appealed to the Supreme Court, and the upcoming decision will be particularly significant for blended families and others who have entered into contracting out agreements as part of their estate planning.

In particular, the Court has asked that submissions focus on the interaction between section 21 agreements and inheritance rights. The key issue is whether a surviving partner who elects Option B under section 61 of the PRA can also rely on a contracting out agreement while receiving their entitlement under a will or on intestacy.

Why This Matters

Many people think of contracting out agreements as documents that only become relevant on separation. Rimmer v Wilton shows that they can also have significant consequences when a partner dies.

If a couple intends that a contracting out agreement should limit or exclude a surviving partner's inheritance rights, that should be clearly addressed in the agreement and considered alongside their wills and broader estate planning arrangements.

Contracting out agreements are often particularly important in blended family situations, where there may be competing interests between a surviving partner and children from an earlier relationship.

It is also common for couples to have contracting out agreements that were entered into many years ago. In some cases, those agreements were prepared at a time when parties received less detailed independent advice than would typically be expected today. As a result, older agreements can sometimes be highly one sided and may not adequately address what is intended to happen on death or how relationship property acquired during the relationship is to be treated.

Rimmer v Wilton highlights the importance of reviewing those arrangements. In blended family situations particularly, a contracting out agreement may have a significant impact on what ultimately passes to a surviving partner and what remains available for children and other beneficiaries.

Looking Ahead

The Supreme Court's decision will be closely watched by relationship property and estate planning practitioners.

Couples should ensure that their contracting out agreement clearly records what they intend to happen on death and that those intentions are consistent with their wills and wider estate planning.

Rimmer v Wilton is a timely reminder that contracting out agreements, wills and other estate planning documents should operate together to accurately reflect a couple's intentions, particularly in blended family situations. For those who already have a contracting out agreement in place, particularly one entered into many years ago, it may be appropriate to review that agreement alongside their will and broader estate planning arrangements.

If you have concerns about whether your contracting out agreement still reflects your intentions, or whether it aligns with your will and wider estate planning arrangements, our experienced relationship property and estate planning team can assist. We can review existing agreements, identify any issues or inconsistencies, and help ensure your relationship property arrangements, will, and other estate planning documents work together to achieve the outcomes you intend on both separation and death.

[1] Rimmer v Wilton [2025] NZCA 374.