The Institute of Legal Secretaries and PAs recently introduced a new Family Law unit to its Legal Secretaries Diploma course. This month we are considering possible changes to the law relating to marital property and prenuptial agreements.
A prenuptial agreement is the term commonly used to describe a range of different agreements. These agreements are designed to set forth how property and finances will be dealt with if a married couple separate. A prenuptial agreement is one entered into before a marriage. A postnuptial or separation agreement is one entered into after marriage.
Many couples resolve the financial consequences of divorce without going to court. Where this is not possible, the courts have a very broad discretion to redistribute the parties’ property and income. If the courts are involved, one of the key factors that they take into account when making a decision is the parties’ financial needs. Over the years the meaning of “needs” has caused confusion for those separating. Questions such as how much one spouse should pay to meet the needs of the other can cause endless arguments. Another area of uncertainty is how the courts should treat property that one party brought into the relationship or acquired by gift or inheritance during the relationship. Any change that helps answer these questions should be welcome.
The proposed changes are based on a Law Commission report published in March 2014. The Commission has made recommendations to clarify the law of “financial needs” on divorce (or dissolution of a civil partnership). It has suggested that nuptial agreements should be introduced in England and Wales in some cases of divorce. Under the current law prenuptial agreements are not fully enforceable, but the judgment of the Supreme Court in Radmacher v Granatino  UKSC 42 started to change this. The court said that they should be given “decisive weight” unless the agreements were unfair. If prenuptial agreements were allowed, they would be enforceable contracts, which would enable couples to make binding arrangements for the financial consequences of divorce. In order for an agreement to be a “qualifying” nuptial agreement, certain safeguards would have to be met. One such safeguard would be that these agreements could not be used by parties to opt out of meeting the genuine “financial needs” of each other or of any children.
The Law Commission report included a draft Nuptial Agreements Bill, and this might be used by Parliament to introduce qualifying nuptial agreements in England and Wales.
The response from the government to the Law Commission report is that they want separating couples to be given clear new guidelines setting out what they should expect when property and income are distributed by the courts and what will be a “qualifying” agreement.
The Justice Minister, Simon Hughes, has asked the Family Justice Council to take forward the Law Commission’s recommendation. If a new law is introduced, it will no doubt be widely reported in the media and the Institute will provide a detailed update for its members.