Tuesday, January 11, 2011

The future for pre-nuptial agreements

As anticipated, the Law Commission today published its consultation paper on marital property agreements. The accompanying press release reads:

The future for pre-nuptial agreements

Should a couple be able to make a firm agreement – before they get married or enter a civil partnership – about what should happen to their property if their relationship ends? Or should the law remain as it stands, that the courts can decide if their agreement is enforceable?

In a consultation launched today, the Law Commission is asking the public’s views on a range of potential options for reforming the law of pre-nuptial, post-nuptial and separation agreements – contracts made by couples before or during their marriage or civil partnership that are intended to govern their financial arrangements if the relationship ends.

Such agreements have attracted considerable attention in recent months after the judgment of the Supreme Court in Radmacher v Granatino, which went further than ever before in recognising their significance.

But the Supreme Court’s decision was made in the context of the existing legislation. As it stands, the law does not allow a couple to prevent each other from asking the courts to decide how their property should be shared. And it is still down to the courts to decide on a case-by-case basis how much weight to give to any agreement the couple may have made. In many cases this can offer important protection but it can also lead to uncertainty and expensive litigation and there have been calls for statutory reform.

In its consultation, the Law Commission is asking whether the current legislation – which is a generation old – provides the right basis for determining the effect of marital property agreements, or whether a new approach is needed. Could reform bring more autonomy and certainty to couples who want to enter into such agreements, while retaining sufficient safeguards to protect vulnerable spouses and children?

Professor Elizabeth Cooke, the Law Commissioner leading the project, said today:

“Pre-nups are a topical issue. Under the current law the starting point for the resolution of financial division on divorce is the discretion of the court. Some feel that where couples have reached agreement, the courts should not be involved; yet the courts’ approach is primarily protective, and some feel that they should not be wholly excluded.

“Our consultation paper considers the arguments for and against reform and examines how a new approach might balance the desire of some couples to plot their own future with more certainty against the need for safeguards against exploitation and the creation of hardship. This is an issue that needs to be handled with care.”

A summary of the proposals [can be found here]. The full consultation paper is available [here]. The consultation closes on 11 April 2011.

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