UK should make pre-nups legally binding, says Law Commission
The Law Commission has published a report recommending that pre-nuptial agreements be made legally binding under a series of conditions.
According to law firm Withers, family lawyers immersed in the detail of current case law might see little significant development in the actual effect proposed by the draft bill, as pre-nups are already potentially enforceable.
However, if legislation is enacted, the answer to the frequently asked question “Are pre-nups binding?” will become a resounding” yes”, (as long as legal formalities are met and needs are catered for). This will enable some couples to ring-fence assets they have brought into the marriage such as inherited property or pre-existing business interests.
Suzanne Kingston, Partner in Withers Family Team says: “These recommendations represent a welcome stride towards greater autonomy and certainty for couples. If implemented, then a pre-nup fulfilling certain conditions will be legally binding. However, it will not be possible to avoid meeting the financial needs of partners and children and, as always, the question is what falls under the definition of 'needs'?”
Making pre-nups binding would bring the UK into line with many other jurisdictions internationally. In an international survey conducted earlier this year, Kingston highlighted how other jurisdictions deal with pre-nups and there are many examples of countries where pre-nups or marriage contracts are recognised.
States across the US permit legally binding pre and post-nuptial marital agreements as do New Zealand and Scotland. The majority of civil law European countries address the issues by way of marriage contracts in which the rules for the division of property on death, divorce or bankruptcy are already set out. Looking at the Law Commission’s recommendations, going forward what continues to set the UK apart is the additional ‘safeguard’ concerning whether ‘needs’ have been met and it remains to be seen how that will be dealt with in the context of the parties having entered into a pre-nup.
Claire Blakemore, Partner in the Family Team at Withers, says: “Individuals with pre-acquired wealth or inherited assets will welcome the recommendation by the Law Commission that parties should be able to enter into binding nuptial agreements if ‘needs’ are met. However following this report the focus will inevitably now turn to what constitutes ‘needs’ – historically an elastic concept in the Family Courts – and how the Courts will assess whether ‘needs’ have been met, where parties have signed a pre-nup. Will couples be able to enter binding pre-nups in which provision for ‘needs’ is lower than a Court would award had they not entered into the pre-nup?”
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