Fate of pre-nups and divorce matters to more than just celebs

As the Law Commission publishes its Supplementary Consultation Paper on the financial consequences of divorce, Dr Thérèse Callus, from the University of Reading’s School of Law, argues that the present law on divorce could be said to be uncertain, outdated and inappropriate to today’s couples.

The fate of pre-nups and divorce matters to more than just celebs

A Law Commission Consultation in 2011 considered whether ‘pre-nups’ – pre-nuptial agreements between spouses, as favoured by celebrities and the super-rich – should receive greater weight in English law. While pre-nups tend to be of only minimal interest to the average couple, their status in English law says a lot about how law regulates the consequences of marriage and civil partnership for us all. (The discussion that follows applies equally to civil partners insofar as the law relating to the dissolution of a civil partnership mirrors that applicable to spouses upon divorce). It is for this reason that the Law Commission issued the Supplementary Consultation Paper  ‘Marital Agreements, Needs and Property’ on 11th September 2012.

London is termed the ‘divorce capital of the world’ yet many argue that the law on divorce settlements is uncertain, dated and incompatible with today’s society. Wealthy individuals claim the right to draw up pre-nuptial contracts in order to protect ‘their’ wealth from being divided with an ex-spouse upon divorce. Yet these ‘contracts’ are not legally binding in law. They are simply one of the considerations that a court will take into account when deciding what a ‘fair’ outcome will be for the parties, through the application of an Act of Parliament from 1973.

In the English common law system, there is no equivalent to the continental matrimonial property regimes or contracts which come into effect upon marriage and which provide for property distribution when the marriage is dissolved through either divorce or death. Consequently, in England & Wales, what is gained from a bespoke case-by-case result is lost in the lack of certainty, both for practitioners advising their clients, and for couples about to embark upon marriage but who are concerned to maintain autonomy over their financial situation.

The law is thus unpredictable and unclear.  The Law Commission consultation on pre-nups in 2011 posed different options for reform and in so doing highlighted the controversial and ambiguous notions of ‘non-matrimonial property’ and the ‘needs’ of each spouse following divorce.  It is these wider issues that are of most interest to all couples and the subject of the Supplementary Consultation Paper.

In making an order, the English courts have always concentrated on the ‘needs’ of the claimant spouse. It is obvious that within most marriages, one or other of the spouses may make career – and therefore economic – sacrifices for the benefit of the family, and often to undertake child care. This in turn allows one spouse to continue with their career and earning progression. Upon divorce, the economically weaker spouse finds herself (or himself) at a disadvantage because of the respective contributions during the marriage. Is this merely to be seen as a matter of choice? Or should the law require that the spouse who maintains their earning capacity ‘compensate’ the other for their economic dependence? What of the pre-nuptial contract which stated that no claim should be made on each other? And what about pre-acquired wealth? For example, how should the law separate Paul McCartney’s wealth accumulated during his music career which preceded his marriage to Heather Mills compared to the family business in existence prior to the marriage, but which has greatly increased in value during the marriage, in part because the non-business spouse has looked after the family? These are some of the questions which need to be addressed through the current consultations.

Of course, more than the legal issues at stake are the political risks – no Government wants to be seen to be ‘undermining marriage’ but at the same time, claims for respect for individual autonomy and choice are strong. Yet choice is only real when parties know both the options and their consequences. The Supplementary Consultation Paper thus also highlights the importance of educating couples as to the legal implications of their actions.

The debate is now open not only on how finances should be shared upon divorce and dissolution of civil partnership, but indeed the rationale behind why the law should dictate how parties wish to manage their lives.  In limiting the consultation to marital property, agreements, and needs, the Government has indicated it is not willing to consider wholesale reform.  Although the Law Commission has realistically noted that such fundamental reform cannot be achieved in this current round, it is clear that the stakes for society are such that it is only a matter of time (and political will) before any Government is forced to grasp the nettle.

Dr Thérèse Callus is Senior Lecturer in Law and a member of the Advisory Board to the Matrimonial Property, Needs and Agreements project to the Law Commission. The opinions expressed in this piece are her own.

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2 comments

  1. Suzy Miller’s avatar

    Yes we need to make the outcomes of going to court to gain a settlement less like rolling a die – and clarification of what a judge would deem ‘fair’ would presumably also be of great help to those couples who are creating their own agreements out of court using mediation or the collaborative process. The detractors seem to claim that more rules will add rigidity to a system that needs to cater for many different personal situations and circumstances. But guidelines are useless if they are not clear, and it seems that great confusion currently reigns. Are the detractors of change really more concerned with the empowerment of divorcing couples who no longer wish solicitors to remain the only gatekeepers to the divorce process? And what about the growing number of people who do not marry, nor create a living together agreement mainly because they believe in the myth of common law marriage? No reforms will be truly relevant unless they encompass the way real people choose to combine their financial situations whether they have children or not.

    And if any proposed reforms are to be realistic and appropriate, surely they need to include the inarguable – yet legally it appears forgotten – fact, that divorce is an emotional and psychological process first, and a legal and financial one second? Will the committees discussing reform include divorce consultants, financial coaches, or parenting experts?

    Suzy Miller
    Divorce in a Box – break up right, please don’t fight.

  2. Tony Roe’s avatar

    Dr Callus’ points are very well made. They highlight the importance of this supplemental consultation paper which provides a golden opportunity for possible change.

    The Law Commission’s paper recognises that there is no clear law to tell us what needs are. We, as family lawyers, whether academics or in practice, may be able to say what level of needs the courts will generally award, but only by studying case law. Such case law generally comes from bigger money cases that may not be straightforward to turn into guidance for ordinary cases. This is all the more relevant given that, on the Ministry of Justice’s own figures, over 210,000 people applying to the family courts will soon no longer be eligible for state-funded legal help.

    The Commission seeks to improve matters in the short term by clarifying the current law. It accepts that principled reform will take some years to achieve. In the meantime, it considers reform that will give some direction to the court’s discretion, where possible, and provide fresh sources of information and authoritative guidance for separating couples.

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