Law Commission and Pre-Nups

Resolution today welcomed the report by the Law Commission, Matrimonial Property, Needs and Agreements: The Future of Financial Orders on Divorce and Dissolution, which makes two key recommendations.

The first is that ‘qualifying nuptial agreements’ (in particular, the agreements commonly referred to as pre-nups) become enforceable contracts.

The second recommendation is that guidance be produced on the meaning of ‘financial needs,’ so that it is clearer to anyone going through divorce and separation what the financial outcome is likely to be.

Resolution welcomed the recommendation to introduce legislation for ‘qualifying nuptial agreements,’ which would make pre-nups (and post-nups, which are becoming more widely used) legally binding – providing they meet specified requirements.

Resolution has been calling for this change in the law for a number of years.  With second marriages on the rise, people marrying later in life, and many couples entering marriage with money and property already to their name, demand for pre-nups has been on the rise.

Resolution doesn’t expect this measure to lead to every engaged couple in the country seeking a pre-nup, but for those couples who want to have one in place, it will make their legal situation much clearer and reduce uncertainty upon separation.

It’s also important to note that the court will still have the ability to review agreements in so far as they deal with people’s financial needs.

Individuals’ financial needs – in particular those of any children – are still the overriding consideration, and couples will not be able to make binding agreements which allow them to avoid future consideration of financial needs.

There is, therefore, a risk that we could end up with a two-tier arrangement, where one type of agreement is legally binding, and others still open to challenge – couples need to be aware of this, and that’s why the recommendation that people are required to seek legal advice is so important.

  

Resolution welcomed the Law Commission’s recommendation that the Family Justice Council should produce guidance to give people a better understanding of what is currently meant by ‘financial needs.’  It would, said Resolution, take some of the uncertainty out of financial outcomes following a divorce, which can often be a major cause of stress and anxiety during the process.

 Splitting up can be one of the most traumatic events anyone can go through in their lives. Resolution welcomes any measure that provides greater clarity and helps people have realistic expectations of what their finances might look like after separation, as well as greater confidence in any arrangements they make.

It is absolutely right that, when looking at financial needs, parents’ responsibilities to their children are the first consideration. This is one of the overarching principles in Resolution’s Code of Practice that members abide by.

Guidance on needs should encourage consistency, dispel myths and manage expectations. This will help anyone going through separation, even if they don’t have access to legal advice and support, or are trying to reach agreements on their own, during a very traumatic time.

Whilst welcoming the Law Commission’s recommendations, Resolution emphasised that wider reforms of the law surrounding separation and divorce were needed in order to support separating couples.

The last major reform to divorce law was in 1973, and Resolution believes more changes are needed to make the law relevant to modern day. For example, Resolution wants to see the removal of the need to assign blame if a marriage breaks down, which can often ramp up the conflict and cause unnecessary emotional distress.

Resolution would also like to see more wholesale reform of the law about financial provision on divorce, to provide clearer guidance about likely outcomes. It’s important that anyone going through a divorce has some degree of certainty about how long it will be before they achieve financial independence and have some degree of closure.