UK – Matrimonial property, needs and agreements

Status: Consultation on our questions regarding marital property agreements closed on 11 April 2011. The project was extended on 6 February 2012 to cover two further issues of financial provision arising on divorce or the dissolution of a civil partnership. We intend to publish a supplementary consultation paper in autumn 2012.

Relationship breakdown remains a significant phenomenon, and financial and property disputes between separating spouses or civil partners often lead to distress and expense. 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 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 particular uncertainty is how the courts treat property that one party brought into the relationship or acquired by gift or inheritance during it.

The project will also continue to consider the treatment of pre-nuptial, post-nuptial and separation agreements – which we call marital property 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 divorce or dissolve their partnership. Such agreements are not currently enforceable (in contrast to the position in many other jurisdictions). The court may, however, have regard to them in determining what financial orders to make. The judgment of the Supreme Court in Radmacher v Granatino [2010] UKSC 42 went further than ever before in recognising their significance.

The project

The Law Commission commenced a project in October 2009 to examine the status and enforceability of marital property agreements. On 11 January 2011 we published a consultation paper. This reviewed the current law of marital property agreements, discussed options for reform and put forward questions for consultees. Consultation closed on 11 April 2011.

It has now been agreed with the Ministry of Justice that the scope of the project will be extended to include a targeted review of two aspects of financial provision on divorce and the dissolution of a civil partnership. We will be reviewing the law relating to needs, examining the extent to which one spouse or civil partner should be required to meet the other’s needs following divorce or dissolution. The other area under review will be non-matrimonial property, a concept used by the courts to describe property that was acquired by either party prior to the marriage or civil partnership, or received by gift or inheritance at any time. We will consider the way that such property should be treated on divorce or dissolution.

This will not, however, be a full-scale reform project directed at the entirety of the law of financial orders. Rather, the aim is to bring clarity and predictability to two areas of that law that cause particular difficulties.

We will publish a supplementary consultation paper in autumn 2012. This will put forward a further series of questions arising from the extended terms of the project. We aim to publish our final recommendations in autumn 2013.

Professor Elizabeth Cooke, the Law Commissioner with responsibility for the project, has written an article for the journal Family Law which explains the background to the extension of the project and sets out some of the issues that will be considered.  This article was published by Family Law (a publishing imprint of Jordan Publishing Ltd) in the March 2012 issue of the journal Family Law, at [2012] Fam Law 323.

In recognition of the extended scope, the Marital Property Agreements project has been renamed the Matrimonial Property, Needs and Agreements project. For more information see the Law Commission statement.