Wealthy families in the UK are navigating growing uncertainty as government reform of financial remedies, cohabitation rights and prenuptial agreements continues to be delayed. Lawyers say this lack of clarity is leaving high-net-worth clients exposed to costly disputes, long court battles and complex cross-border risks.
Prenups under pressure
Lois Rogers, partner at Ribet Myles, explains that current law gives couples more room to challenge agreements. ‘The lack of codification of prenup law currently provides greater uncertainty and consequently often lengthier and more costly cases for clients, particularly when it comes to the division of complex assets,’ she says. ‘In short, the current legal position provides more scope, and therefore incentive, to dispute.’
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Prenups are often tested in court. Rogers adds: ‘Clearer enforceability principles would likely reduce litigation and discourage the sometimes opportunistic challenges made in the hope of leveraging a better financial outcome even where the prenup was fair and properly prepared.’
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Jennifer Dickson, partner in the family team at Withers, points out that disputes around prenups and postnups have increased over the last decade. ‘Earlier this year, I acted for a client seeking to uphold a postnuptial agreement. We won with a costs order, but that involved protracted litigation and a full final hearing,’ she says. She stresses that a ‘gold-standard’ prenup – with full financial disclosure, independent legal advice and time to reflect – is far more likely to stand up in court.
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The danger of ‘common-law marriage’
Misunderstandings about cohabitation remain widespread. Rogers warns: ‘This is incredibly risky where one half of the couple is wealthier than the other and or they own property and other assets which may be considered as shared by them throughout the relationship but where that ownership isn’t formalised by legal agreements. The less wealthy party is often left extremely financially vulnerable, with no legal recourse even in a long-term relationship.’
Dickson adds: ‘Cohabiting couples have no automatic financial claims on separation save in respect of dependent children but they are unaware that they are unprotected. There are limited circumstances in which one partner might have a property claim if the home is in the other partner’s name but those disputes can be complex and costly.’
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Some wealthy families even choose cohabitation deliberately to avoid English financial rules. Emily, another family law expert, explains: ‘International families and their family offices are generally acutely sensitive to the risks of divorce and this may be a driving force not only for cohabitation but also for exiting the jurisdiction.’
Court delays are costly
Delays in family courts add to the problem. Rogers highlights the practical impact: last-minute adjournments and cutbacks are costing clients time and money. Dickson says, ‘Until cases are resolved, families often remain financially entangled, sharing homes, running businesses together and providing ongoing financial support. It is an expensive and emotionally draining time for people.’
Alternative dispute resolution is increasingly popular. ‘Mediation and arbitration are far quicker, smoother and cheaper than litigating an outcome,’ says Dickson, noting that court approval is still needed to make agreements legally binding.
For international clients, Brexit has added complexity. Emily explains: ‘Even where a divorce petition has been issued first in this jurisdiction or elsewhere, parallel proceedings can be brought in one or more jurisdictions in relation to the divorce. The significance of this is that the financial outcome is mostly determined by where the divorce takes place.’
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Reform cannot wait
When asked which reform is most urgent, Rogers and Dickson emphasise cohabitation law. ‘Cohabitation law reform remains the urgent priority,’ Rogers says. Dickson adds that giving prenups a clear statutory footing would provide immediate certainty and protect wealth. Emily highlights the importance of recognising overseas prenups, suggesting that English courts giving weight to foreign agreements would reassure international clients.
Rogers concludes: ‘The goal isn’t to strip the courts of discretion entirely but to codify existing best practice ensuring that fair, transparent agreements are respected while still allowing intervention where necessary.’ For wealthy families, legal reform cannot come soon enough.
