The long awaited report from The Law Commission in relation to prenups is finally available and as we had been expecting for some time the recommendation is that prenups should be made legally binding, subject though to certain legal safeguards.
In essence a prenup enables parties to agree the terms of their divorce before they even marry. A prenup can set out exactly what the divorce settlement would be, or in many cases simply exclude assets from consideration upon divorce, commonly assets held by either party before marriage or perhaps gifts or inheritances received form family members. Some couples even go a stage further and seek to include provisions in their prenups as to how they will conduct their married lives. It was widely reported that when Facebook CEO married that his prenup stipulated that he would have a “date night” once a week with this wife.
What we have seen, probably in the last ten years or so, has been a gradual and growing recognition of prenups in the eyes of the Courts. It was not that long ago when the Courts would pay no serious attention at all to the existence of a prenup. However, since the Radmacher case in 2010 we reached the point where the existence of a prenup can carry “decisive weight” when determining financial settlements upon divorce. If adopted the Law Commission’s recommendations go another step further.
It will remain to be seen how the government respond to the Law Commission’s recommendations and changes to the family law system do tend to be somewhat slow moving. For example there have been discussions about extending much greater legal rights to couples who are cohabiting but are not married to each other for many years, but they have still not been acted upon by the government.
Assuming that the Law Commission’s recommendations are adopted in some form there will need to be safeguards, which we anticipate would include a requirement for each party to have proper legal advice, a requirement for each party to fully disclose their financial position to their fiancé and also to sign the agreement at least 28 days before marriage to avoid last minute pressure to sign before the wedding.
We feel that the overall fairness of the agreement also ought to be considered before holding a prenup to be binding. Take for example a couple who marry in their 60s having previously both been through a divorce. They have similar earnings, assets and pensions. In this case a prenup that states that in the event of divorce that they would each simply retain their own assets and there would be no maintenance claims would appear reasonable and most people would agree that their prenup should stand. However, take for example a young couple who marry at 20 who then have the same agreement. The husband goes on to become a successful businessman, makes several million pounds over a 20 year marriage all of which he decides to hold in his name. The wife gives up her own career prospects and stays at home to look after their 3 children, one of whom has serious disabilities and will require ongoing 24 hour a day care for the rest of his life. The wife has no assets at all in her name. When they split up after 20 years of marriage should she really receive nothing in accordance with the prenup they signed 20 years earlier? Would that be fair or in the best interests of the children? We think not. As they say the devil will be in the detail as to if, how and when the Law Commission’s recommendations will be adopted.
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