Possible Law Reform in England and Wales: Law Commission Recommendations
The decision of the Supreme Court in Radmacher v Granatino in 2010 takes the current law on prenuptial agreements as far as it can go in favour of upholding prenups and all other marital agreements in England and Wales, so long as they are fair.
In 2009 the Law Commission began a project to consider whether the law should go further than this and whether prenuptial agreements should be made legally enforceable, so that they exclude the court’s jurisdiction to deal with the financial aspects of divorce. This would involve new legislation.
In February 2012, the Law Commission’s project was extended to include consideration of the financial needs that must be met after divorce and to clarify the treatment of the law relating to “non matrimonial” property (assets acquired before a marriage, or by way of gift, or inheritance).
On 27 February 2014, the Law Commission published their Final Report on “Matrimonial Property, Needs and Agreements” in which they recommend the introduction of legally binding prenuptial agreements, to be known as “Qualifying Nuptial Agreements”, which would avoid the Court’s jurisdiction.
In order to be enforceable, certain requirements would have to be met, including:-
- It must be a valid contract – there must be no suggestion of any undue influence or misrepresentation;
- The agreement must be made by deed;
- Qualifying nuptial agreements must contain a statement signed by both parties that they understand they are signing a qualifying nuptial agreement and that it will remove the court’s discretion to make financial provision orders, other than in relation to their financial needs;
- In relation to prenuptial agreements, a qualifying nuptial agreement must be signed at least 28 days before the date of the wedding;
- Both parties must have received material financial disclosure about the other’s financial situation;
- Both parties must have received independent legal advice at the time of the agreement.
The Law Commission’s Report and Draft Bill make it clear that, just as now, it will not be possible on their proposals for the parties to contract out of meeting each other’s financial needs on divorce as well as the financial needs of any children of the family. So, under their proposals, needs (rather than under the principle in Radmacher, the broader more nebulous concept of “fairness) will be the safeguard in respect of Qualifying Nuptial Agreements.
The Law Commission failed to give any clear guidance in their Final Report and recommendations on the meaning of financial needs that must be met on divorce. This work has been passed to the Family Justice Council who have been tasked with preparing guidance for the judiciary and the public on the financial needs that have to be met on divorce which includes the ability to house oneself and meet one’s income needs/outgoings.
If you are considering entering into a prenuptial agreement, we provide free initial legal advice by telephone or e-mail. We assess your requirements and provide initial advice about how a prenuptial agreement could work in your particular circumstances, at no cost to you and without any obligation for you to instruct us formally to act. If you do then decide to instruct us formally, we will invite you to attend a meeting. After that meeting, we will provide you with an estimate of what the cost of your prenuptial agreement is likely to be.