The Law Commission has today published a report making important recommendations about the law relating to the financial aspects of divorce and dissolution of civil partnership.
Currently, the courts apply principles of meeting needs, first consideration being given to the needs of children of the family, sharing and compensation.
The report recommends that guidance should be produced to explain that, when determining a financial settlement between separating couples, a judge aims to enable both parties to make a transition to independence.
This guidance would enable couples to reach an agreement that recognises their financial responsibilities to each other, and reflects what the law says on how this should be done.
Guidance will also help to reinforce consistency to how the law is applied in the courts providing greater certainty for separating couples. However, the proposals are that the guidance should relate only to meeting needs, and not deal with the principles of sharing and compensation.
The report also recommends the introduction of “qualifying nuptial agreements”. These would be enforceable contracts which would enable couples to make binding arrangements about the financial consequences of divorce or dissolution, without the approval of the courts. Certain procedural safeguards would have to be met, such as the requirement to obtain independent legal advice, for there to have been full and frank financial disclosure and for the agreement not to have been made less than 28 days before the celebration of the marriage or the civil partnership.
Qualifying nuptial agreements could not be used by the parties to contract out of meeting the “financial needs” of each other and of any children. They will, however, be able to provide for how property should be shared after needs have been met.
Pre-nuptial and post-nuptial agreements have become more commonplace in England and Wales. However, they currently cannot be enforced as contracts and they cannot take away the courts’ powers to make orders.
The only way to achieve legal finality is to ask the court to make orders that reflect the terms of the agreement. The Supreme Court has said that this should be done unless the agreement is unfair.
Pre-nuptial and post-nuptial agreements appeal not only to high-net-worth couples who wish to protect their property but also to couples who have their own property which they wish to keep separate or who have children from a previous relationship whose interests they wish to protect.