Pre-nuptial and post-nuptial agreements are becoming increasingly popular in recent years, providing a means for couples to settle their own financial affairs, without the need for expensive Court proceedings.  However, separating couples are usually surprised (and alarmed) to discover that such agreements are not enforceable contracts.

The current law

At present, the only way a former partner can be held to the terms of such a financial agreement is to make an application to the Court, asking the Court to convert the terms into a binding Order.

Provided the agreement is carefully drafted, the agreement has not been entered into too close to a wedding or civil partnership ceremony, there has been an exchange of full financial information between the parties, and the parties have both received the benefit of legal advice, the terms will usually be upheld, if the needs of the couple and their children are met, and the agreement is fair.  However, the Court currently retains a wide discretion when deciding which financial orders are appropriate, so no guarantee can be given that all (or any) of the terms of the agreement will be upheld by the Court.   This uncertainty deters some couples from opting for this form of self-regulation.

The Law Commission’s proposals

The Law Commission has recently published a report recommending that “qualifying nuptial agreements” should be made into law.  If the government adopts the recommendations, couples will be able to agree legally binding pre- and post- nuptial agreements, provided a number of conditions are met.  This includes the following:-

  1. The agreement must be contractually valid.  For instance, not entered into under duress;
  2.  Both parties must have received the benefit of legal advice;
  3. The agreement must have been made by deed and must contain a statement confirming that the parties understand it’s effect;
  4. The parties must have exchanged full financial information;
  5. The agreement must not have been made within 28 days immediately before/after the wedding or civil partnership ceremony;
  6. The agreement must meet the financial needs of the couple and their children.  This includes the need for housing, child care and income.  It will not be possible for couples to “contract out” of meeting these financial needs.

It is anticipated that the meaning of “financial needs” will be clarified in guidance to be published by the Family Justice Council.  If this guidance is forthcoming, it should help to reduce arguments about whether the agreement has properly catered for the couples’ needs.

A more certain future?

These recommendations, if made into law, will provide couples with a greater degree of certainty and autonomy when deciding financial arrangements following a separation.  It is yet to be seen whether these recommendations will be made into law, and whether the definition of needs will be open to interpretation, and therefore open to challenge in Court.

If you are considering entering into a pre-nuptial or post-nuptial agreement, or require advice on your options, our experienced family team can advise you and assist you in preparing an agreement.