Prenups - not just for celebrities!
Last year, the Law Commission released a report on ‘the future of financial orders on divorce’, which said: ’qualifying pre-nuptial agreements’ should be legally binding subject to a strict set of preconditions being met. This would in effect mean that such agreements would be enforceable contracts between the parties and would not be subjected to the Court’s assessment of fairness and its application of discretion, when deciding how matrimonial assets should be divided upon the unfortunate breakdown of a marriage.
The proposal seems to offer parties much more predictability and potential security however, on the flipside, there are also potential risks to parties who perhaps enter into a pre-nuptial agreement at a point when everyone intends that the marriage will continue.
The Law Commission also considered the potential risk that parties may be vulnerable to optimism and potential pressure, whether deliberate or not, when entering into pre-nuptial agreements. For this reason, they also recommended that, whilst ‘qualifying pre-nuptial agreements’ should be enforceable as contracts, neither party should be able to make contractually enforceable agreements which irreversibly deal with their future needs for housing, childcare, income or any other aspects of ‘financial needs’.
In essence this means that parties will still be able to enter into agreements which will determine how some, or all, of their property is divided. They will also however still have the option open to them to issue an application at Court for a Financial Order should they discover upon the unfortunate breakdown of their marriage, that the agreement they had previously entered into does not in fact meet their ‘financial needs’. Moreover, the proposal to make ‘qualifying pre-nuptial agreements’ legally binding will still not remove the Court’s powers to make financial orders to meet the parties ’financial needs’, even if such an Order goes against the terms of the previously agreed ‘qualifying pre-nuptial agreement.’
Those couples who are able to meet their needs independently of one another and who have assets they wish to protect from sharing are likely to benefit from a prenup. However, the law as it stands continues to provide security to those whose financial needs may outweigh the existence of any agreement, because ‘needs will inevitably continue to trump a pre-nuptial agreement.’
Julie Hobson is head of the
family team at Gullands Solicitors
and can be reached at
01622 689700