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The Future of Pre-nups Lies in the Balance

Monday, 17 January 2011

The Law Commission, the body which advises the Government on changes to the law, begins public consultation yesterday on full recognition for pre-nuptial agreements in British law.

Pre-nups are not currently enforceable in the event of a divorce or the dissolution of a civil partnership. The court may, however, have regard to them in determining the appropriate distribution of assets. Pre-nups have attracted considerable attention in recent months after the judgement of the Supreme Court in Radmacher v Granatino [2010] UKSC 42, which went further than ever before in recognising their significance. But the Supreme Court's decision was made in the context of 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.

The Law Commission first started to look at pre-nuptial agreements back in 2009 but stalled until the outcome of the Supreme Court's decision of Radmacher case. In its consultation paper published yesterday, the Law Commission is seeking the public's views on a range of potential options for reforming the law of pre-nuptial, post-nuptial and separation agreements.

Issues the Commission are looking at include whether:-

•· a couple should be able to make a firm agreement (before they get married or enter into a civil partnership) about what should happen their property if their relationship ends; or whether

•· the law should remain as it stands, that the courts can decide if their agreement is enforceable.

The report also suggests that a pre-nuptial agreement would not be enforceable against a either party as a qualifying agreement unless that party had received material full and frank disclosure of the other party's financial situation. The emphasis on disclosure of material financial information means that, for example, failure to disclose a particular asset might render the agreement unenforceable.

Professor Elizabeth Cooke, the Law Commissioner leading the project, said: "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."

Consultation ends on April 11, 2011 and it is therefore anticipated that the government will take a decision in relation to this by the end of the year. It is therefore advisable for those contemplating marriage or civil partnership seek advice on pre-nuptial agreements now in preparation for a future change in law.

Rollingsons Family Solicitors advise on pre-nuptial agreements, and also on post-nuptial and separation agreements which are aimed at protecting assets that become apparent after marriage such as an inheritance or sudden windfall. For a free initial consultation please contact us on 020 7611 4848