Law Commission says prenups should be binding only after financial responsibilities to children and each other are met

Introducting prenuptial agreements without protection of the parties’ needs ‘would be very damaging’, the Law Commission warns. Photograph: Rob White for the Observer

Prenuptial agreements should be legally binding in divorce settlements, but only after the needs of the separating couple and any children have been taken into account, the Law Commission has recommended.

In a report on the reform of matrimonial property laws, the commission calls for the introduction of standard formulas to help resolve disputes over financial settlements and publication of official guidance on what constitutes legitimate “financial needs”.

British courts already recognise prenuptial agreements as enforceable under British divorce law. The principle was established by a case in 2010 involving German heir Katrin Radmacher, who sought to protect her £106m fortune in the event of a marriage breakdown.

The commission, a statutory independent body that advises on law reform, recommends that “prenups” should become legally binding subject to stringent qualifications. One requirement is that at the time of signing both parties must disclose material information about their financial situation and have received legal advice.

A further restriction, under the commission’s proposals, is that agreements would only be enforceable “after both partner’s financial needs, and any financial responsibilities towards children, have been met”.

The report states: “It will remain open to spouses to make agreements about financial needs, but such terms will not be contractually enforceable and will be subject to the courts’ scrutiny for fairness as they are at present. A qualifying nuptial agreement will not remove the parties’ ability to apply for, and the courts’ jurisdiction to make, financial orders to meet their financial needs.”

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