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Prenuptial agreements should be legally binding in divorce cases says Law Commission

In its recently published Report on “Matrimonial Property, Needs and Agreements”  the Law Commission has stated that prenuptial agreements should be legally binding in divorce cases.

Prenuptial agreements, pre-nups, and pre-marital arrangements are all terms that refer to a contract that is entered into by a couple before a marriage or civil union. They are formal written agreements that set out terms governing what will happen to each party’s property and assets if the marriage or union were to come to an end.

The law as it currently stands means that pre-nups (and post-nups) are increasingly taken into account but there is no guarantee that they will be effective.  The Law Commission has now published its report on whether they should become legally binding.

There is a draft Bill currently going through Parliament called the Nuptial Agreements Bill although when this will become law is a matter for debate – the general feeling is that it will not be enacted during the lifetime of the current Government.

The report recommends that if the Bill is enacted, there will be two categories of nuptial agreements- “Qualifying Nuptial Agreements” (QNAs) which will be automatically binding,and “Non-Qualifying Nuptial Agreements” (NQNAs) which are those that fall short of the requirements to be QNAs but may still be binding.

A nuptial agreement will be found binding only after the “financial needs” of the separating couple and any children have been taken into account and subject to stringent qualifications including the following:

  1. For those signed before marriage, they must be signed at least 28 days before the marriage or civil partnership.
  2. There must be no undue influence on either party to the agreement.
  3. It must be properly executed – what this means is that it must be in writing and made as a Deed.  There must be an intention to create legal relations.
  4. It must contain a statement signed by both parties that he/she understands it is a qualifying nuptial agreement.
  5. Both parties must disclose material information about their financial situation.
  6. Both parties should receive legal advice on the agreement.

The report also recommends an introduction of standard formulae to help resolve disputes over financial settlements and publication of official guidance on what constitutes legitimate “financial needs”.  However it is not clear how those formulae will be calculated, and at best they could only provide a guide rather than accurate figures for any given case.

The existence of a Qualifying Nuptial Agreement will not bar the parties from applying to the Court for financial orders to meet their financial needs or affect the Court’s powers to make such orders.

The Law Commission’s proposals are not legally binding yet and the existing law based on the highly publicised case of Radmacher v Granatino is still highly relevant.

It is important for anyone entering into or considering entering into a nuptial agreement to take specialist advice in the light of these proposals. If you are affected by any of the issues in this article or would like to talk through the options for preparing such an agreement, or feel you need advice on how these proposals might impact on an agreement already entered into by you and your partner, please contact Miles & Partners on 0207 426 0400 and ask to speak to someone in our matrimonial team all of whom are Resolution accredited specialist advisors.

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.