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Bill seeks to make prenups legally enforceable

01 February 2017
Private Member's Bill in the House of Lords seeks to make prenuptial agreements legally enforceable.

A crossbench Private Member's Bill, the Divorce (Financial Provision) Bill, was introduced by Baroness Deech in the House of Lords and received its first reading on 26 May 2016.

The Bill proposes to replace section 25(2) of the Matrimonial Causes Act 1973 with "provisions about the principles to be applied in determining the applications for such orders, including provision about the effect of pre-nuptial and post-nuptial agreements." The bill received its second reading in the House of Lords on 27 January 2017, and passed to the committee stage.

Baroness Deech has introduced similar Private Member's Bills in the three previous Parliamentary sessions, one of which completed all stages in the House of Lords but failed to receive a first reading in the Commons. The central premise of her latest bill remains as before, described by Baroness Deech succinctly as consisting of "Three pillars: binding prenups, an equal division of post-marital assets and some curbing of maintenance."

In relation to prenuptial agreements and other marital agreements, under the terms of the bill these would be strictly enforceable and would prevent financial claims being made to the courts on divorce, so long as basic conditions were met, i.e. contractual validity, both parties received independent legal advice (or had adequate opportunity to do so), financial disclosure before the agreement was made and, in the case of a prenuptial agreement, that it was made at least 21 days before the marriage.

Among other peers who spoke in support of the bill, Lord Kennedy of Southwark (Labour) set out the following advantages of marital agreements being legally enforceable: "Binding agreements could provide couples deciding to marry with the ability to plan with more certainty…. significant money could be saved in lawyer and court costs and.. it could take some of the hostility and bitterness out of the process for the divorcing parties."

However, Baroness Deech's bill goes much further than the careful and considered recommendations in the Law Commission's Final Report: Matrimonial Property, Needs and Agreements, published in February 2014, which recommended that "qualifying nuptial agreements" should be legally binding, subject to similar criteria to the Private Member's Bill. However, under the Law Commission's proposals, in addition to these criteria, there would be an overarching safeguard that the financial needs of any children, as well as both parties to the marriage, would have to be met in order for the agreement to be upheld. The Law Commission's Final Report was the culmination of a 4½ year project examining the status and enforceability of prenuptial agreements, and included research and widespread public consultation.

Speaking for the Government, Baroness Buscombe said that under the terms of the bill: "...Prenuptial and post-nuptial matrimonial property agreements (would) be binding upon couples on divorce, except in very limited circumstances… (and pointed out that) ...this does not take adequate account of the needs of parties following divorce, which may have changed since the agreement was made". She stated that the Government is (still) considering the Law Commission's Final Report and "will respond in due course in the context of our wider plans for family law and system reform".

Hopefully, Baroness Deech's Bill will act as a prompt and reminder to the Government about the importance of this issue and the need for reform to put prenuptial agreements on a statutory footing, in a way which balances appropriately the need for more certainty in relation to future financial outcomes on divorce against the need to protect vulnerable parties from financial hardship caused by marital breakdown many years after the agreement.

Watch this space!

Maeve O'Higgins Family Law Partner, Burlingtons Legal | Email: maeve.ohiggins@burlingtonslegal.com, Tel: +44 (0) 207 529 5420

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