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Law Commission Backs 'Qualifying Nuptial Agreements'
Following hard upon a case in which the court refused to uphold a pre-nuptial agreement signed by a city lawyer and his bride-to-be on the day before their wedding, the Law Commission has published proposals for pre-nuptial agreements to become binding in English law.
Hitherto, following the much-publicised Supreme Court decision in Radmacher v Granatino, ‘pre-nups’, although not binding, have generally been upheld by the English courts provided the court is satisfied that the agreement was entered into with appropriate safeguards in place – such as independent legal advice having been taken by both parties. However, not all such agreements pass the necessary tests.
In the absence of any agreement to the contrary, English law assumes that ‘matrimonial property’ divided equally. That assumption does not apply to ‘non-matrimonial property’ – for example any inheritance received or wealth brought into the marriage by one party. However, the law gives the courts a wide discretion to make appropriate financial orders to meet the parties’ ‘financial needs’.
The Law Commission has now produced a report called ‘Matrimonial Property, Needs and Agreements’, which sets out proposals that pre-nups and post-nuptial agreements should be made legally binding by the creation of appropriate statute to provide for ‘qualifying nuptial agreements’.
The 231-page report reviews the law relating to the division of assets on relationship break-up. It recommends that the Family Justice Council produce authoritative guidance on financial needs, in order to iron out inconsistencies in how the courts approach such awards, but makes no recommendation for reform of the treatment of non-matrimonial property.
In all cases, the needs of children of the marriage will be the first consideration of the courts.
The report points out that qualifying nuptial agreements are likely to be particularly useful in two situations.
Firstly, they will be an important source of legal certainty for high net worth couples who want to make clear and reliable arrangements as regards their wealth – for example as a way of protecting an inheritance from being shared on divorce or dissolution. Secondly, they will be useful where the parties to a marriage or civil partnership have been in a relationship before and wish to safeguard a house or other assets for their children from that relationship.