Law Commission Supplemental Consultation on Matrimonial Property Needs and Agreements

The Law Commission has carried out a Supplementary Consultation on financial ‘needs’ and ‘agreements’ in relation to matrimonial property. The Supplementary Consultation, which ran from 11 September to 11 December 2012, followed a consultation in relation to matrimonial property agreements (pre-nuptial, post-nuptial and separation agreements) in 2011.

Purpose of the Law Commission Supplemental Consultation

The purpose behind the Supplemental Consultation was to examine two specific issues in relation to financial provision in divorce or dissolution of civil partnerships:

1. Financial Needs – to what extent should one spouse be required to meet the other’s needs and what does ‘need’ actually mean?
2. Non-matrimonial property – what happens to property that one of the partners owned before the relationship or property that is received by gift or inheritance during the relationship?

Currently, statutory provisions are detailed about the kinds of orders that can be made by courts in circumstances of divorce or dissolution but they do not give direction regarding outcomes. The financial disruption caused by legal separation is significant and it is recognised that the lack of clarity that exists is unhelpful, with inconsistent outcomes common.

Financial Needs

Currently the law makes it clear that former spouses have a responsibility to meet each other’s financial needs; broadly entailing: strict needs, compensation and sharing. Beyond that clarity is replaced by uncertainty with numerous variables in place – income or capital, short or long term needs etc.

Defining needs therefore requires considerable discretion which has led to great inconsistencies in the outcomes that parties have received and great uncertainty about what parties can expect if they find themselves in court.

As well as needs, courts also consider the compensation suitable for parties that have given up careers for marriage and the sharing of assets. Considering these as a whole, the supplementary consultation questions whether the discretion of the court should be replaced by a formula.

Non-matrimonial Property

Once needs have been met and compensation accounted for, the remaining assets of a couple are usually divided. When dividing the assets of a couple, the court generally excludes non-matrimonial property - property owned before the relationship or property that is received by gift or inheritance during the relationship.

The Supplementary Consultation questions:

• The definition of matrimonial property
• Whether there is a rule that it is not shared
• If it must be shared to meet needs
• Whether it can become matrimonial property e.g. by passage of time

 

Conclusion

The law commission is expected to make recommendations in Autumn 2013.

If you would like to discuss the implications of the Law Commission Supplementary Consultation or other you need advice in relation to other family law issues please contact Melanie Bataillard-Samuel via e-mail MBataillard-Samuel@rollingsons.co.uk or by telephone on 0207 611 4848.