Mar 01, 2014
The Law Commission is awaiting Government's response after making recommendations to clarify the law of “financial needs” on divorce or dissolution of a civil partnership and to introduce qualifying nuptial agreements in England and Wales.
Many couples resolve the financial consequences of divorce or dissolution without going to court. But where this is not possible, the courts have a very broad discretion to redistribute the parties’ property and income.
One of the key factors that the court must take into account when making a decision is the parties’ financial needs. The meaning of “needs” in this context has generated uncertainty and there is confusion, for those separating, about the extent to which one spouse should be required to meet the other’s needs after their formal relationship has come to an end. Another area of uncertainty is how the courts treat property that one party brought into the relationship or acquired by gift or inheritance during it.
The Law Commission's project also considered the treatment of pre-nuptial, post-nuptial and separation agreements. These are agreements made between couples before or during their marriage or civil partnership as to how their property and finances will be dealt with if they were to separate. Such agreements are not currently enforceable but the judgment of the Supreme Court in Radmacher v Granatino  UKSC 42 said that they should be given “decisive weight” unless the agreement is unfair.
The final report was published on 27 February 2014. The report sets out and explains our recommendations for reform, which would:
- Clarify, through the provision of guidance by the Family Justice Council, the law relating to “financial needs”. This would ensure that the law is applied consistently by the courts and reinforce judicial best practice. Guidance will also give people without legal representation access to a clear statement of their responsibilities and the objective of a transition to independence that a financial settlement should achieve.
- Investigate the possibility of whether an aid to calculation of “financial needs” could be devised. That formulae, if developed, would take the form of non-statutory guidance and would give a range of outcomes, in figures, within which the separating couple might negotiate.
- Introduce “qualifying nuptial agreements”. These would be enforceable contracts, which would enable couples to make binding arrangements for the financial consequences of divorce or dissolution. In order for an agreement to be a “qualifying” nuptial agreement, certain procedural safeguards would have to be met. Qualifying agreements could not, however, be used by parties to contract out of meeting the “financial needs” of each other and of any children.
The Law Commision's report includes a draft Nuptial Agreements Bill, which would introduce qualifying nuptial agreements in England and Wales.