Matrimonial Property, Needs and Agreements

Status: This project is complete

We have made recommendations to clarify the law of “financial needs” on divorce or dissolution of a civil partnership and to introduce qualifying nuptial agreements in England and Wales.

Many couples resolve the financial consequences of divorce or dissolution without going to court.  But where this is not possible, the courts have a very broad discretion to redistribute the parties’ property and income.

One of the key factors that the court must take into account when making a decision is the parties’ financial needs.  The meaning of “needs” in this context has generated uncertainty and there is confusion, for those separating, about the extent to which one spouse should be required to meet the other’s needs after their formal relationship has come to an end.  Another area of uncertainty is how the courts treat property that one party brought into the relationship or acquired by gift or inheritance during it.

The project also considered the treatment of pre-nuptial, post-nuptial and separation agreements.  These are agreements made between couples before or during their marriage or civil partnership as to how their property and finances will be dealt with if they were to separate.  Such agreements are not currently enforceable but the judgment of the Supreme Court in Radmacher v Granatino [2010] UKSC 42 said that they should be given “decisive weight” unless the agreement is unfair.

The project

The Law Commission commenced a project in 2009 to examine the status and enforceability of marital property agreements.  In January 2011 we opened a consultation, reviewing the current law of marital property agreements and discussing options for reform.

The project was extended in 2012 to cover two further issues of financial provision arising on divorce or the dissolution of a civil partnership.  It was agreed with the Ministry of Justice that the scope of the project should be extended to include a targeted review of two aspects of financial provision on divorce and the dissolution of a civil partnership: financial needs and non-matrimonial property.  We opened a supplementary consultation in September 2012.

The project was not a full-scale reform project directed at the entirety of the law of financial orders.  Rather, the aim was to bring clarity and predictability to areas of that law that cause particular difficulties.

Altogether, we received almost 150 consultation responses from members of the public, lawyers and other professionals and organisations.  The consultation papers and responses, together with other material related to the project, can also be found on this page.

Our recommendations and the Government's response

The final report was published on 27 February 2014.  The report sets out and explains our recommendations for reform, which would:

  • Clarify, through the provision of guidance by the Family Justice Council, the law relating to “financial needs”.  This would ensure that the law is applied consistently by the courts and reinforce judicial best practice.  Guidance will also give people without legal representation access to a clear statement of their responsibilities and the objective of a transition to independence that a financial settlement should achieve.
  • Investigate the possibility of whether an aid to calculation of “financial needs” could be devised.  We envisage that formulae, if developed, would take the form of non-statutory guidance and would give a range of outcomes, in figures, within which the separating couple might negotiate.
  • Introduce “qualifying nuptial agreements”.  These would be enforceable contracts, which would enable couples to make binding arrangements for the financial consequences of divorce or dissolution.  In order for an agreement to be a “qualifying” nuptial agreement, certain procedural safeguards would have to be met.  Qualifying agreements could not, however, be used by parties to contract out of meeting the “financial needs” of each other and of any children.

Our report includes a draft Nuptial Agreements Bill, which would introduce qualifying nuptial agreements in England and Wales.

In this video, Law Commissioner Professor Elizabeth Cooke, sets out recommendations for reform.

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We received two letters from the Minister of State for Justice and Civil Liberties, Simon Hughes MP, dated 8 April and 18 September 2014 which together stand as the Government’s interim response to our recommendations.  The Ministry of Justice also issued a press release dated 17 April 2014.

The Family Justice Council is producing the guidance on needs that we recommended and the Ministry of Justice is undertaking scoping work on the feasibility of developing non-statutory and numerical guidance on the calculation of financial needs.  The Government considers that there is unlikely to be time for the Nuptial Agreements Bill to progress through Parliament before it is dissolved in March 2015 ahead of the General Election.  Accordingly, it takes the view that the Government’s final response regarding nuptial agreements should await the next Parliament, rather than being published in February 2015, giving the new Government time to consider our policy recommendations on this topic, and the Bill.