Paving the Way for Pre-Nups

18 February 2011

The Law Commission has now published its Consultation Paper (11 January 2011) on how it proposes changes in the law of pre-nuptial agreements.

The Commission delayed its report a few months in the light of a recent Supreme Court ruling in October 2010 (Radmacher v Granatino). In that case a German heiress divorcing in London has successfully held her French husband to the terms of the agreement they signed 8 years previously.

The Law Commission says that English family law is too uncertain, particularly as regards the treatment of assets brought into the marriage by one party, inherited assets, and those gifted to one spouse. These are called "non-matrimonial assets" Lawyers find it hard to advise clients on these. Only in January 2011, the Court of Appeal awarded a wife nearly £3million more than the High Court had done for her share of the Husband's oil business assets which he had brought into the marriage. This was 40% more than the High Court award.

The Law Commission says that to help avoid these problems pre-nuptial agreements should be able to ring fence those assets and stop the other spouse claiming against them in the event of divorce.

However, there will be safeguards the Commission says, so that the needs of children are met in any event, and no spouse will be left reliant on state benefits.

The Law Commission is less certain how "matrimonial" assets can be incorporated in pre-nuptial agreements. The Commission suggests there ought to be some role for a judge's scrutiny and discretion to remain here to over-ride unfair agreements. The proposals are out to consultation until 11 April 2011 and the Government may legislate in 2012 The paper can be viewed at http://www.lawcom.gov.uk/docs/cp198.pdf