Pre nups are go, but are they enforceable?
5 February 2014
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21 May 2014
Pre nups are big news, but will the Law Commission’s recommendations clarify the law?
The Law Commission is expected to produce recommendations later this month to bring about some reform to financial provision on divorce.
The original project dealt with “marital agreements”, in the main pre or post nuptial contracts (or agreements between civil partners or prospective civil partners). The issue is whether and if so, to what extent, marital agreements should be strictly enforceable rather than persuasive.
They are already in some cases given weight, but the question is whether some agreements will be binding. There would need to be safeguards at the time the agreement was entered into. For instance, there should be full disclosure and legal advice, so that the parties are aware of the rights they are giving up by entering into an agreement. As pre nups are intended to cater for an unknown future, however, disclosure and advice would not prevent an agreement being reached which had unexpected, and unfair, consequences to one of the parties.
The other safeguards are likely to centre around the effect of the agreement. If parties can get out of an agreement if it proves not to be fair, then that is not much of an advance over the current law following the case of Radmacher v Granatino. There is a balance to be struck between more certainty, and the ability for adults to regulate their own arrangements; and protection for the vulnerable, and wider interests such as the requirements of any children and the state. There is a valid objection to a spouse being able to contract out of support for children or the other spouse who would otherwise have to rely on state benefits.
Other possibilities entail allowing agreements to be binding provided that they cater for needs, that they only apply to certain types of property and/or that they are time limited (in that there may be less concern by a wealthy spouse about financial provision after a long marriage).
This led on to two supplementary questions. How should needs be defined and what is the legal status of non matrimonial property (for example inheritance or money brought into a relationship) and how that is quantified and treated. The response to these questions would have an wider effect than just cases in which there is a marital agreement. The issue of needs is particularly important for maintenance and there is an issue as to how much should be paid and for how long, and the principles or calculations upon which maintenance should be based. As it is still more often the woman than the man who gives up an earning capacity for the family, it is potentially discriminatory not to take into account compensation for a wife who gives up her career and is limited to basic “needs”; on the other hand, the payer may be concerned about the encouragement of continuing dependence.
It will have to be seen if there is political support for a change in the law in an area in which there are strongly held diverging views. Our current system has the admirable intention of fairness in each individual case, but this has led to much uncertainty which makes cases difficult to settle with the attendant cost. The aim is to clarify the law at least and that should be achievable.
By Sarah Higgins, joint head of family, Charles Russell.