New prenup guidelines UK 2014
In February the Law Commission recommended that prenuptial agreements, which allow a couple to agree divorce terms before they get married, should be legally binding with the reservation that the needs of any children and the separating couple are first taken into account.
The Law Commission is a statutory independent body with the task of reviewing current law and recommending where reform is needed. Their report published in February 2014 on matrimonial property law reform aims to make it easier for couples to manage their finances and property after divorce.
Currently couples are able to make both prenuptial and postnuptial agreements, and over recent years they have become increasingly commonplace. However they are not legally binding and there is no guarantee that they would be upheld by a divorce court.
The report recommends introducing qualifying nuptial agreements which are legally binding and specify how assets should be split after the relationship has ended. However, such agreements shouldn’t allow either partner to avoid the financial needs of the other or the financial needs of any children. It will not be possible to contract out of any financial responsibilities.
Once those needs have been considered, the commission believes that married couples and civil partners should be entitled to agree their own financial arrangements. Such qualifying nuptial agreements would make the financial outcome of divorce more predictable.
Qualifying nuptial agreements would also need to meet a number of stringent legal requirements. There must be complete financial discloser by both partners and there mustn’t be any form of coercion or undue influence to sign such an agreement.
Other recommendations are:
- that qualifying nuptial agreements should be made by deed;
- that they should include signed statements that the parties understand that the agreement will remove the court’s discretion other than ensuring that financial needs are provided for;
- that prenuptial agreements must be made at least 28 days before the marriage or civil partnership takes place.
It will also be essential for both parties to receive independent Prenuptial legal advice including the implications of preventing the court from making financial orders that are inconsistent with the agreement and on the rights of the person receiving the advice.
The report also calls for guidance on “financial needs”. Currently when couples separate the most important element of court orders is meeting the “financial needs” of both parties. However there are regional inconsistencies in the interpretation of this and can lead to unpredictability. Official guidance on legitimate “financial needs” will help couples understand their mutual financial responsibilities to each other and help them to eventually achieve financial independence. The report is in line with other European jurisdictions and includes a draft bill called the Nuptial Agreements Bill.