The Law Commission has today published a consultation on the future of pre-nuptial agreements, seeking views on whether couples should be able to make binding agreements governing financial arrangements if their relationships end.

The paper puts forward a range of options for reforming the law of pre-nuptial, post-nuptial and separation agreements.

It seeks views on whether couples should be able to enter into a binding agreement not to seek ancillary relief in the event of divorce or dissolution, and whether such agreements should be able to encompass all of a couple’s property, or contain only terms relating to pre-acquired, gifted or inherited property.

The commission ‘provisionally proposes’ that for such agreements to be enforceable, they should be in writing, with each party required to have taken legal advice, and the party seeking to enforce the agreement must have made full and frank disclosure of their financial situation.

It does not propose setting any timelimits that would automatically invalidate an agreement, and explores the possibility that an agreement would cease to have effect after a certain period of time, or on the occurrence of a certain specified event, such as the birth of a child.

The paper proposes that an agreement should not be enforceable if it fails to provide for the needs of any children of the family, or leaves one party reliant on state benefits.

The commission delayed publication of the consultation pending the Supreme Court’s decision in Radmacher v Grantino [2010] UKSC 42.

In that case, a German heiress and her French husband had entered into a pre-nuptial agreement to the effect that neither would have a claim on the other’s wealth in the event of divorce.

The Supreme Court ruled that the court should give effect to a pre-nuptial agreement that is freely entered into by each party, with a full appreciation of its implications, unless – in the circumstances prevailing – it would not be fair to hold the parties to their agreement.

At present, the law does not allow couples to prevent each other from asking the courts to decide how their property should be shared, and it is down to the courts to decide on a case-by-case basis how much weight to give to an agreement made between them.

‘In many cases this can offer important protection, but it can also lead to uncertainty and expensive litigation, and their have been calls for statutory reform,’ the paper said.

Professor Elizabeth Cooke, the commissioner leading the project, said pre-nups were a ‘topical issue’ and needed to be ‘handled with care’.

She said that under the current law, the starting point for the resolution of financial division on divorce is the discretion of the court, and while some feel that where couples have reached agreement, the courts should not be involved, others believe the courts should not be wholly excluded.

‘Our consultation paper considers the arguments for and against reform and examines how a new approach might balance the desire of some couples to plot their own future with more certainty, against the need for safeguards against exploitation and the creation of hardship,’ she said.

The full consultation paper is available on the Law Commission website. The consultation closes on 11 April 2011.