Pre-Nuptial Agreements To Be Legal – All Change Or No Real Change?

Family Lawyers React To New Law Commission Proposals

27.02.2014

Dave Grimshaw, Press Officer | 0114 274 4397

Specialist family lawyers say Law Commission proposals for new legislation will make qualifying pre-nuptial agreements legally binding and provide more clarity to couples going through a divorce.

However the expert family law team at Irwin Mitchell says that other elements of the new proposals are still unclear and await the results of further research by the Family Justice Council which has been tasked with giving advice on what is meant by the ‘financial needs’ of each party.

Under the plans, announced today by the Law Commission, a pre-nuptial agreement will “qualify” if it meets the contract law criteria (no fraud, undue influence etc.), the agreement is signed as a deed no less than 28 days before the wedding, and contains a statement that the couple understand that the agreement is a qualifying nuptial agreement that will partially remove the court’s discretion to make financial orders. Both parties must also have had legal advice and full disclosure.

The court will not be able to depart from a qualifying pre-nup unless it does not provide for a party’s needs. So if a qualifying pre-nup meets the needs of the parties and any children it will be binding and the court will have no discretion to make an order that differs from the terms of the pre-agreement.

Expert Opinion
This provides clarity after years of uncertainty and will turn case law (Radmacher v Granatino in 2010) into law, as well as changing the current emphasis so that the court has no power to interfere if the agreement 'qualifies'.

"Qualifying pre-nuptial agreements will give couples greater autonomy to determine the financial outcome in the event of a future separation - it will be more predictable and less expensive. The proviso that it needs to meet the parties and children’s needs will avoid unfair agreements. This approach to pre-nuptial agreements is more in line with how they are treated in the rest of Europe.

"This long-overdue decision to make pre-nups legally binding under the right circumstances will bring clarity to how these agreements are dealt with in the courts and provide couples with more certainty over the whole process."
Alison Hawes, Partner

The report deals with two other hot topics.

One is assets that belong to one party only – such as an inheritance or gift. The report says legislating for these assets to be dealt with in a particular way would be too controversial. Inherited wealth and similar assets will be dealt with just as they are now: the court will have discretion to include them or not, depending on the facts. However, the report does point out that if a couple deals with these types of asset in a Nuptial Agreement that qualifies, the court won’t be able to interfere.

Expert Opinion
This section of the report means that qualifying pre-nups will be of even more importance to couples who want to ringfence their own wealth if there is a divorce."
Alison Hawes, Partner

The second hot topic is “needs” and how they can be codified.  The Law Commission proposed the Family Justice Council draft guidance of the meaning of “financial needs”.

Expert Opinion
It appears the aim is for there to be a more consistent and predictable approach. Regional variations between courts have created a bit of a postcode lottery. The increase in litigants in person means a predictable formula will bring certainty and make the judges’ job easier, but until the research is in we won’t know whether that is at the expense of fairness."
Alison Hawes, Partner