The Law Commission has released its scoping report in relation to reform of the law of financial remedies on divorce and dissolution of civil partnership. In the report, the Commission considers four models for reform, ranging from codification of the current law (which would largely maintain the law as is, but would set it out in a way that makes it clear and accessible) to introduction of a fixed model for distribution of assets on divorce. Commenting on the Commission’s report and suggestions, Claire Yorke, partner in the Family law team at Mishcon de Reya, said:
“One of the policy assumptions taken into account by the Law Commission was that the law should not discriminate between the respective roles of parties to a marriage or civil partnership. While this is now largely taken for granted, it was not expressly part of the law on financial claims on divorce until 2001. However, the Law Commission notes arguments that have been made that equal division of current assets fails to take into account the structural economic and social realities of society, namely that an equal share of assets between a spouse who has an on-going earning capacity (often a husband) and the other spouse (often a wife) who has given up their career to look after the children is unlikely to result in an equal start on the road to independent living.
“The report noted that many stakeholders considered that there should be a time limit on when an individual could bring a financial remedies claim. While this might be beneficial in terms of creating certainty and reducing claims being brought many years (sometimes decades) after a divorce, any limitation would need to be carefully considered in terms of how it might affect, for example, applicants who have been subject to domestic abuse and so have been reluctant to bring claims immediately on divorce.
“The report considers whether pension sharing should be a default position of any financial remedies law. With several studies showing that pensions are often overlooked when spouses resolve their financial affairs on divorce, despite a pension sometimes being the most valuable asset in a marriage, an expectation that pensions should be shared might go some way towards ensuring that financially weaker spouses are not left unable meet their needs on retirement. Any system should retain a degree of flexibility, with couples close to retirement having very different needs and concerns compared to those in the early stages of a career.
“The Law Commission notes that any reform to the law may include provision making nuptial agreements binding, although reform could range from confirming the current position that agreements properly entered into are upheld, provided they are fair, to creating a new system of formally binding agreements – this could bring the country in line with the approach adopted in many other countries worldwide. The present approach to pre-nuptial agreements reflects the discretionary nature of financial remedy proceedings as a whole – in particular, a pre-nuptial agreement that fails to meet the financially weaker party’s needs is unlikely to be upheld. While a more rigid regime would create greater certainty, hopefully reducing the need for litigation, the “safety-net” of meeting needs is attractive and should perhaps be considered as a requirement for any future scheme.
“Consideration should also be given to the position of children of the marriage who are over the age of 18 – a recent report noted that 84% of divorced individuals who had children over 18 were financially supporting them. With the current socio-economic climate resulting in more adult children remaining reliant on their parents, it may well be time to consider whether their needs should be considered on divorce even after the age of 18 or university course ends.
“Although the terms of reference for the scoping report excluded consideration of the law relating to cohabitants on relationship breakdown, the report noted that this was an issue raised by many of those spoken to. It expressed the view of the Law Commission that reform of the law in respect of cohabitation is needed – this is an area of law that many in the family justice system have campaigned for change in respect of for years. I am pleased to see the Commission’s views on the importance of reforming cohabitation laws to protect cohabitees and their dependants.”