The Law Commission have now published their long awaited report – Matrimonial Property, Needs and Agreements. The report was published on 27 February 2014 and is accompanied by a press release of the same date.
The Law Commission has made recommendations on several areas of the law in their report, which focuses on the financial aspects of the breakdown of a marriage or a civil partnership.
Marital Property Agreements
You can find our posts on pre-nuptial agreements here and here. The current position is that whilst they are becoming more prevalent in England and Wales, and are increasingly taken into account by the Courts, they are not strictly enforceable as contracts and the Court can depart from them.
The report recommends that “qualifying nuptial agreements” should be enshrined in law. As such these agreements would become enforceable contracts, not subject to interference by the Courts. This would enable couples to make binding arrangements about what their financial arrangements will be following the breakdown of their marriage or civil partnership. However, to ensure that such agreements are appropriate, the report suggests that certain procedural safeguards would have to be met. The agreements would only be able to take effect once both partner’s financial needs are met, and any financial responsibilities towards children have been addressed. It is also suggested that the agreements will only be binding if both parties have full information about the financial circumstances of each of them and provided they have both received legal advice.
This report includes a draft Bill, called the Nuptial Agreements Bill to enact the proposals.
Professor Elizabeth Cooke, Law Commissioner for property, family and trust law, said in the press release:
“We believe that married couples and civil partners should have the power to decide their own financial arrangements, but should not be able to contract out of their responsibilities for each other’s financial needs, or for their children. The measures we are recommending would help couples understand and meet their financial responsibilities and, where appropriate, achieve financial independence.
“Pre- and post-nuptial agreements are becoming more commonplace but the courts will not always follow them and lawyers are therefore not able to give clear advice about their effect. Qualifying nuptial agreements would give couples autonomy and control, and make the financial outcome of separation more predictable. We have built in safeguards to ensure that they cannot be used to impose hardship on either party, nor to escape responsibility for children or to burden the state.”
See Professor Cooke discussing the recommendations in this Youtube video.
The report also makes a recommendation that guidance be produced on financial needs, which is a matter which the Court has regard to when determining applications for financial settlements. The Courts have a very wide discretion, which inevitable results in a degree of inconsistencies across regional Courts. This can make it hard for a couple to reach an agreement about what would be an appropriate settlement.
It is suggested that the guidance should help to reinforce consistency to how the law is applied in the courts, which should in turn improve public confidence in the system. Guidance is sought from the Family Justice Council to provide an indication of the sort of outcome that should be aimed for, without actually providing figures.
The report goes even further to suggest that it be considered whether it would be possible for a formula to be put in place to act as a guide as to what payments should be made from one spouse to another. This would be a long term project, so we cannot expect any answers on this issue just yet.
Image by James Wellington under a Creative Commons Licence