Matrimonial Property, Needs and Agreements
  • 27th Feb 2014
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Today the Law Commission published its report, Matrimonial Property, Needs and Agreements, concluding a project commencing in 2009. The report, as might be expected, is detailed and lengthy, but there are two key recommendations;

• “Qualifying Nuptial Agreements”, or “pre-nups” as more commonly known become binding; and

• Guidance is given on what “financial needs” mean; so as to give clarity on what outcome a divorcing couple can expect.

Nuptial agreements are common and binding across many countries in the world, but English law has been slow to catch up. Following a Supreme Court decision in 2010, while they now have a central role in the division of assets on divorce, they do not bind the court. An individual seeking to escape the provisions of nuptial agreement can still apply to the court. Whether or not the agreement is upheld will only be determined at the outcome of proceedings.

Making nuptial agreements binding would avoid that uncertainty. The Law Commission recommends safeguards be in place (for example both parties having separate legal advice, and financial information) and the agreement must leave each party able to meet their needs, so as to avoid the potential for abuse.

It is unlikely that, if implemented, the recommendation would lead to a rush of engaged couples entering into nuptial agreements, but it would give greater certainty to those who chose to.

The issue of “needs” is often one that gives rise to much discussion. It is a very subjective term, and often has regard to the standard of living during the marriage. For example, the former spouse of a multi billionaire would not be expected to eke out a living on the breadline, but the reality is that for most couples, separation and divorce does lead to both parties having to cut their cloth to a greater or lesser extent.

The Law Commission has recommended that guidance be given as to how needs are calculated, with the aim of ensuring continuity and guiding parties as to what they can expect. The Commission did not go so far as to recommend a mathematical formula for calculating need, but it has suggested this idea be investigated, possibly to give a range of outcomes within which negotiations can take place.

These are recommendations; it remains to be seen what response the Government makes. Successive governments have been wary of family law reforms, realising it is a subject upon which many voters have deeply held views, and reforms may be unpopular. It remains to be seen to what extent the Law Commission’s recommendations will be turned into law.