Following the recent recommendation of the Law Commission that pre-nuptial agreements should be made law, there has undoubtedly been a resurgence of interest from couples looking to protect their assets.
The concept of the pre-nuptial agreement is a simple one. It allows a couple entering into marriage or a civil partnership to decide in advance how they would divide their wealth should they separate. The Law Commission is of the view that a “Qualifying Nuptial Agreement” would provide “the most workable balance between autonomy, certainty an protection”.
The Law Commission does however suggest certain restrictions so that an agreement cannot be used to contract out responsibility to maintain a child of the relationship or result in one partner becoming dependent on the state.
Provided these conditions are met and certain procedures are followed, the suggestion is that the Court should not be permitted to make a financial order which is not consistent with the agreement.
To qualify as an agreement, the Law Commission recommends that:
- There must be no evidence that either party was under duress to agree and sign the document
- The agreement is put in writing and signed by both in the presence of witnesses
- It is acknowledged within the agreement that each party understands that the discretion of the court to make financial orders upon separation will be removed
- It is made at least 28 days before the date of marriage or civil partnership
- All material information about the other's finances is disclosed at the time the agreement is made
- Both parties receive separate and independent legal advice at the time the agreement is formed.
Who may benefit from a Qualifying Nuptial Agreement?
An agreement would certainly have appeal to those that are perhaps entering into a subsequent marriage or civil partnership having already acquired assets - and possibly with children from an early relationship whose inheritance they would want to safeguard.
Alternatively, a wealthy couple already with sufficient assets going into a marriage may want some certainty about how any surplus beyond their needs would be dealt with.
Another couple may simply want to ensure there is certainty regarding the treatment of specific assets, whether that is an inheritance they are likely to receive or interest in a family business.
The Government is due to publish an interim response to the Law Commission's proposals in August 2014. Although we will have to wait to see whether these proposals give rise to legislative reform the courts in the meantime appear willing at least to give weight to carefully drafted agreements.
Author: Antony Ball
DISCLAIMER: This article should not be regarded as constituting legal advice in relation to particular circumstances. This article is merely a general comment on the relevant topic.
Published on 21st February 2014
(Last updated 28th March 2018)