July 4, 2014

Lords close loopholes in law on pre-nups

Thoughtfully negotiated and properly drafted pre-nuptial agreements are now widely accepted as the sensible way for couples to avoid the potential distress, acrimony and expense associated with resolving financial matters, should their relationship end.

Therefore news that Baroness Deech’s Divorce (Financial Provision) Bill received a favourable second reading in the Lords, and the Bill will now pass to the Committee of the Whole House, is a welcome and encouraging sign that reform of the law will happen. .

Whilst the courts may recognise and often implement pre-marriage agreements put before them, Baroness Deech’s Bill highlights the fact that such arrangements are not legally binding in England & Wales.

This current gap in divorce law gives rise to uncertainty and unpredictability around financial provision, often resulting in costly, lengthy and confrontational challenges – the very issues that the government’s current focus on mediation seeks to avoid.

Thousands of pounds have been spent by couples litigating over whether a pre-nup was binding. In Scotland, and in many other countries around the world, the law is simple and clear on pre-nups – and on greater equality in relation to division of assets. This goes some way to explaining why we see why so many parties travelling to London to gain more generous settlements in the English courts than they might expect at home.

The present and unacceptable situation mitigates against people of modest means in several ways, not least because Legal Aid has been removed from most areas of divorce and family law.

Where a divorcing couple go to court to dispute a pre-nup, a proportion of the assets will be swallowed up in the costs of litigation. If they are unable to afford lawyers, they may be left to represent themselves and judges may have to intervene in these circumstances, prolonging the process and the stress. Both scenarios will have a detrimental impact on any children

An uncertain law needs to be clarified to better reflect the complexities of the society we now live in.

Resolution and the Centre for Social Justice have frequently called for reform and a recent report from the Law Commission also recommended that pre-nuptial agreements should also be legally binding.

It is therefore an encouraging sign that a full examination of these issues will now be aired in the House of Commons.

If you have any concerns or questions about pre-nuptial agreements or financial aspects of a divorce, please call us on 0113 246 0055, leave us a comment below or drop us an e-mail. You can also follow us on Twitter: @helpwithdivorce.