Prenuptial Agreements and the Law Commission: a royal conundrum

Relationships|January 10th 2011

The arguments for and against legalising prenups in this country have been done to death and I don’t intend to rehearse them all over again. For the uninitiated, my view is that they will only ever affect a small minority of wealthy people.

As I believe in a legal system for all, of fairness and justice, I don’t believe in legally “handcuffing” the weaker party to a relationship. I don’t believe a divorce lawyer should be consulted even before a marriage has taken place.

However I am also a realist. There are those who, understandably, wish to protect their assets and pass substantial wealth down through their own families. Let’s take the Royal Family as a working study: they are, after all, the most obvious (if extreme) example of a family in this bracket. As we will see, changes to the law on prenuptial agreements are likely to benefit the relatively few families with dynastic wealth – but at the expense of the less wealthy.

Although members of the Royal Family belong to the ruling family in this country, they are still subject to current financial family law, which deliberately provides for uncertainty. For the vast majority of us, judicial discretion works very well. For millions of couples, it meets those varying needs which cannot all be legislated for. However it doesn’t work so well for the elite group of people wishing to ring fence substantial wealth, whether earned or inherited, before marriage.

The wealth, privilege and extraordinary status of the Royal Family would seem to make its members more vulnerable, not less, to marital breakdown and divorce. In the past twenty years, three of the monarch’s four children have divorced. And these were no ordinary divorces: they exposed intimate details to immense public scrutiny, and the monarchy was damaged as a result.

It wasn’t always this way. Henry VIII, of course, had his own way of dealing with troublesome spouses:  not for them a divorce settlement fit for a queen. George I imprisoned his wife for the last 30 years of her life. However the modern Royal Family is subject to the vagaries of our current law, which takes into account all the resources of a spouse, earned or otherwise. Although many Royals live off inherited wealth and have never earned a penny in their lives, in modern times they are as financially vulnerable to a divorce settlement as the average man or woman on the street.

What would a prenup do for a royal?

Given the Royal Family’s growing vulnerability to broken marriages and the ghastly experiences of the past, its members would be likely to benefit from tougher divorce law.

When Prince William announced his engagement to Kate Middleton in November 2010, certain “well wishers” and family lawyers urged him to sign a prenuptial agreement. At the time this struck me as a distasteful reaction to the happy announcement, and I stand by that sentiment for reasons that I have described in previous posts. On the other hand, I can certainly understand how a requirement to sign a prenuptial agreement, made of anyone who wished to marry into that family, could be regarded as a necessity.  Such a requirement would protect the Royal Family for the future, while preventing past experiences from being repeated.

Tough clauses would aim to keep a future royal spouse as discreet as possible and married for all time. They might include absolute prohibition against any form of consultation with the media in the event of divorce, and a draconian financial divorce settlement to protect the dynastic nature of the family. In other words, you marry into the Royal Family – with all its unique privileges, promises and obligations – and you make your choice. It could be argued that because the members also constitute the institution of monarchy, this puts them into a special, one-off class.

To better protect the Royal Family, a prenuptial agreement would help to close off any existing loopholes and have fault-free divorces proceeding quickly, to contain media speculation. A “belt and braces” approach, including strict division of pre-owned or inherited assets, would also require radical new legislation.

Is this likely to happen and, more importantly, would such changes suit the rest of us?

Following the decision in Radmacher v Granatino, current prenup law states that providing certain formalities are satisfied (and thus introducing room for doubt), there is a presumption that a prenuptial agreement voluntarily signed in accordance with those formalities will be considered binding.

A spanner in the works was the judgement of Baroness Hale, the only family judge in the Radmacher case, whose dissent cast doubt on the legality of this judgement at all. She pointed out that the Law Commission could develop options for reform and put these before Parliament, which, she argued, was “the democratic way of achieving comprehensive and principled reform”. Given these serious doubts and given that judge-made law can change, who knows what could happen in the future?

So even if Prince William, Zara Phillips, Peter Phillips and all the rest of the Queen’s grandchildren have signed or will sign prenuptial agreements, they will all currently be advised that there is still a doubt as to their legality. They will also be advised that a prenup should be reviewed at regular intervals. So there is no cast iron guarantee of prenups’ infallibility. Only a change in legislation could do that.

Prenuptial agreements cannot (yet) be regarded as fully binding.

The fact that judges are calling for new legislation, however senior they may be, does not automatically mean that legislation will come. The august Law Commission, which this week produces a consultation document on the subject, may ultimately, recommend a change in the law – although this too does not necessarily mean that change will happen.

Professor Elizabeth Cooke, the Law Commissioner responsible for reform in family law, has spoken out in the press to reinforce the possibility that a prenup will be valid if it only excludes inherited assets or pre-marital assets owned by a spouse. This is fine and dandy if you happen to be a member of the Royal Family. It isn’t so fine if a wealthier spouse earns nothing during the marriage or gets into debt, but retains the lion’s share on divorce, leaving the other spouse with several children to house and reasonable needs that are left unmet.

Some family lawyers will already be familiar with very difficult cases, in which assets that are not owned but are only classed as “resources” of one party, such as income and property tied up under a family trust, will nevertheless be taken into account by the court in order to meet the spouse’s reasonable needs. What if a prenuptial agreement were to entirely exclude these? What then for the wife left with nothing? Would she lose her children if she couldn’t rehouse them, but her spouse could? Throwing the bedrock of current legislation out of the window cannot be right, in the interests of fairness to all. It is a very tough call indeed, to balance fairly the needs of those with an interest in change against those with none at all, and we will have to wait until after the consultation period to see exactly how and why they recommend the law is changed.

The Law Commission has made many extremely sensible recommendations for changes of the law, which never see the light of day. Millions of couples are currently in cohabiting relationships, but despite the framework of potential legislation recommended by the Law Commission (I was one of the legal advisers to the Law Commission for that report) and despite the existence of successful, similar law in Scotland, there is still no law in this country to regulate the breakdown of cohabitees’ relationships. Couples and children of those relationships are treated as second class citizens in the current legal framework. Are their needs not as important,as those of rich couples signing prenuptial agreements? Perhaps not, given the deafening silence in Government and the lack of Parliamentary time allotted to this issue.

On the other hand, we are told that non-urgent divorce reform is coming.

The recently ennobled family solicitor, Baroness Shackleton of Belgravia, who is to sit as a Conservative working peer in Parliament, has considerable experience of client divorce in the grandest of family fields. She, more than most, knows all the pitfalls of royal divorce.  She represented the heir to the throne, Prince Charles, in his lengthy, far-too-public separation and subsequent divorce.  She was also the solicitor to the unfortunate Mr Granatino, who lost his case in the Supreme Court and has played a role in setting out the law on prenups. Lady Shackleton currently represents Princes William and Harry. She knows how new law could protect the most privileged people in this country.

Time will tell. My money is on new legislation for swift, fault-free divorce and tough, rigidly enforceable prenups becoming law. Other sweeping changes, designed to protect the wealth of the privileged people of this country, may be planned. While I would certainly welcome a speedier, more dignified procedure to end a marriage, other reforms could result in unfairness for the rest of the population of this country. Those most clearly in need of law reform right now are cohabitees and their children, who would have to keep waiting their turn. But if I am right – and if, of course, the Coalition Government survives – divorce reform will not be long in coming.

Author: Stowe Family Law

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