Law Commission's report on Matrimonial Property, Needs and Agreements

Following the publication of the Law Commission's long awaited report regarding the law relating to the financial aspects of divorce and of the dissolution of civil partnership, what will be the impact of the proposed changes?

What is the background to the report?

The Law Commission started a project in October 2009 to examine the status and enforceability of marital property agreements including pre-nuptial, post-nuptial and separation agreements. This project was originally called the ‘Marital Property Agreements project’. It is now known as the ‘Matrimonial Property, Needs and Agreements project’ as the scope of the project was extended during the consultation process.

How have family lawyers responded to the recommendations?

Sarah Anticoni, partner at Charles Russell LLP, said: 'Pre and post marital agreements have now been rebranded as qualifying nuptial agreements. To be binding these agreements will be subject to safeguards to protect the financially weaker party.  No document can exclude the responsibility to meet both parties' needs and those of the children, from the families resources. Parties cannot leave their spouse without anything and expect the state to pick up the tab. The law will remain as it has since 1973 with judges having the power to exercise discretion as to how the resources in any family are to be divided upon divorce to meet needs. What seems clear is that it will be possible to exclude all claims for compensation, or sharing of, pre-acquired or non-matrimonial property (inheritance; previous divorce settlements).  If the bill succeeds, then pre and post marital agreements could become a commodity rather than a luxury.  For those international personnel residing in England, binding agreements will bring a sigh of relief. This may be a real opportunity for people to protect their assets, especially for second or subsequent marriages and may also ensure and encourage parties to think about the financial responsibilities they are entering into when they marry and have children and not leave such expenses to the state. Today may also start an extended period of research and consultation which could, if swiftly implemented, have far reaching consequences for couples divorcing in England and Wales. London might become not just the divorce capital of the world but its epicentre.'

Deborah Jeff, head of the family team at Seddons commented: 'Today's recommendation by the Law Commission has been a long time in the making and is a welcome step towards modernising English law', adding:  'couples will need to build in a review clause to ensure that any children are provided for financially, and any changes in circumstances are considered.  Ultimately, as long as there is no deception or duress involved, a pre-nup is a sensible option. Provided both parties know what they are signing up to then there is every reason why they should be kept to the arrangement agreed.'

Katherine Rayden, who runs specialist family law firm, Rayden Solicitors, believes that ‘for many people, prenuptials can provide a sound platform upon which to base a marriage and provide a measure of certainty that one cannot get from matrimonial law.’ She added:  ‘the current statute  is now 40 years old and with an increasing number of people entering into prenuptial agreements combined with a reduced divorce rate, it is now time for the Government to recognize that meeting the public’s need for clarification does not mean that there will be a sudden rise in divorces.’

Dr Sharon Thompson, lecturer in law at Keele University,  highlighted the deficiencies in the current position regarding pre-nuptial agreements:  'There is a real need for greater clarity and change in how these agreements are drawn up and enforced in order to better meet the needs and requirements of couples today.  The report demonstrates that the definition of unfair is still far too unclear.' She added: 'The Law Commission's recommendations would improve this situation, not only by guaranteeing binding enforcement of prenups - provided spouses' needs are met - but also by explaining what the concept of needs actually means. Another big issue I have come across repeatedly when talking to lawyers is that prenups are almost always drawn up in favour of the party with the most financial leverage, creating an unfair playing field from the start, which then impacts on how these agreements are enforced further down the line. Essentially, prenups are and will always be complicated agreements to enter into, but if legislation is changed in light of the Law Commission report to bring more clarity to the consequences of prenups, I have no question that it could lead to a huge increase in the number of people entering into these agreements in the future.'

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