UK Trends and Developments Contributed by: Ros Bever, Claire-Marie Cornford, Helen Clarke and Ashley Hill, Irwin Mitchell
Upon divorce, the court has discretion to consider the distribution of the assets by reference to Section 25 of the Matrimonial Causes Act 1975. The recent decision of Standish v Standish [UKSC][2024][0089] clarified how the court should deal with non-matri - monial assets (assets acquired before or outside the marriage), and the court emphasised that the sharing principle applies to matrimonial assets. Non-matrimo - nial assets can be “matrimonalised” and subject to the sharing principle, but there is an evidential bur - den to prove that they are intended to be shared. If that is not satisfied, non-matrimonial property is not to be shared unless required to meet needs. The case demonstrates the importance of joined-up advice from financial advisers and lawyers when key finan - cial decisions are being made during the course of a marriage. Looking at the wider context, the UK’s financial rem - edies laws are in need of an update (one of its key pieces of legislation is from the 1970s). Society has moved on a great deal since then, and the treatment of finances on divorce has developed through case law in the family courts. This growing appetite for change is reflected in the Law Commission’s recent Scoping Report, which was published in December 2024. In its report, the Law Commission recognises that the current law does not “provide a cohesive framework in which parties to a divorce or dissolution can expect fair and sufficiently certain outcomes”. The report considers the merits of updating the law to include provision for binding nuptial agreements, providing clarity and certainty for couples at the outset of their marriage. In terms of next steps, the government will now decide whether it agrees that the law should be reformed, and if so, how. The Law Commission can then help to pro - vide recommendations as to what shape that reform should take. If the project moves forward, it seems very likely that the treatment of prenuptial agreements will come under the microscope and any new laws will involve a greater level of certainty around their enforceability. The family courts are under incredible strain. Demand is high and resources are scarce, resulting in long delays for couples who are resolving their financial
disputes through the court system. The government is trying to relieve this pressure, steering families away from the family courts and towards non-court alter - natives such as mediation. For example, significant changes to the Family Procedure Rules 2010 were made last year so that separating couples now need to justify to the court why non-court alternatives have not worked and why they need the court’s help. Judg - es can also delay the court timetable to give parties time to pursue alternatives to court. It is not quite compulsory mediation, but it comes close. Reforming the laws around prenuptial agreements and introducing a greater level of certainty around their enforceability would surely alleviate the pressure on the family courts. If couples could carefully plan from the start – with clear heads and positive inten - tions – how they would manage the financial arrange - ments if their marriage were to end and come away with a binding agreement that they can rely on, this is surely preferable to the expense and stress of dis - puted financial remedy proceedings if the relationship breaks down. One must wait and see what happens next; law reform takes time, and change will not come quickly. In the meantime, prenuptial agreements remain a key wealth protection tool for marrying couples and their families. When properly negotiated and prepared, they protect inter-generational wealth and provide comfort and reassurance from the start of a marriage. Trusts and Companies in a Matrimonial Context As with other estate planning considerations, the use of trusts or companies is particularly relevant to wealth transfer and asset protection. In the context of divorce, these structures can be used by parents and grandparents to benefit their children, or by a party to a marriage themselves with the aim of protecting assets in a divorce. However, they remain susceptible to challenge, particularly if there is a nuptial element. A trust or company may also be useful as part of a divorce settlement, to provide assets that the spouse can benefit from in the knowledge that funds will ulti - mately pass to children or other intended beneficiar - ies.
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