case, covenant marriage is much harder to dissolve compared with regular marriage contracts and carries greater liabilities to the other party. Laying out several alternative
contracts to capture changing or differing marital norms, from among which couples can choose, would help people to visualize the possibilities. This would seem to be a
useful role for the state, and it accords with the idea of enforcing prenuptial agree- ments. The argument is that it may be asking people to do a lot if we expect them to
draft comprehensive marital contracts ab initio. It is probably more realistic to expect them to make a reasonable match when models are presented to them, covering at least
the principal cases e.g., traditional marriage, equal-shares partnership, and separation of property.
As long as expectations are clarified, the inefficient and opportunistic breach of marital contracts could be broadly suppressed. Providing usable models of prenuptial
agreements would assist in this clarification. It also would help to avoid the problem that seems to have arisen in Scotland, where the presumption of equal shares has resulted
in courts preferring to maintain discretion.
VII. Recognizing the Needs of Children
Family lawyers might well be expected to express concern that after economic analysis and moving to a property rule could fail to meet the needs of parties to a marriage,
especially those of any children. English law does currently contain a dominant require- ment to meet the needs of children and then the needs of the dependent former
spouse. In some respects, the recent focus on needs in family law reflects genuine concern with maintaining the welfare of children and typically of divorced wives. In
many ways though, much of the impetus behind the meeting of needs in a settlement can be seen as reflecting a legitimate concern that the state does not pick up the bill for
individuals’ failed marriages.
Although the state does not succeed in avoiding a bill for welfare payments following from the growth in divorce, inasmuch as many divorcing couples are welfare dependent
in the first place and this dependency is extended by divorce, recent statutory changes have limited the state’s liability. The Child Support Act 1991 created a scale of income-
related payments to be transferred between the absent parent and the parent with care to meet non-housing needs. It is notable that payments under the Act and its 1995
successor include a payment to the carer equal to the single person’s supplementary benefit rate. Child-support claims must be made if the parent with care claims welfare
benefits, and privately structured child-maintenance settlements are only possible in the absence of such claims. The effect of the Act is to prevent the court from exercising
discretion in a way that allows divorce settlements to proceed on the basis that typi- cally a divorcee will be receiving welfare payments meeting her needs and those of the
children.
13
That courts in the past did indeed assume the availability of welfare pay- ments in dividing assets or structuring settlements is reported by Eekelaar and Maclean
1986. From the perspective of public finance, there is a legitimate worry about running up
welfare bills to subsidize private citizens’ marital failures. It is less obvious that such
13
Working through CSA calculations suggests that the claims are targeted at recipients who would otherwise become welfare claimants. The recipient’s income can increase by high factors without altering the payer’s liability by any
significant amount. In particular, there is no facility to remove the carer’s allowance if the recipient has an income, which suggests this possibility is not seen as likely.
545 E
CONOMIC
A
NALYSIS AND
M
ARITAL
L
AW
welfare payments also cause a problem from the point of view of the long-term welfare of marriage partners. If the state subsidizes child care or the maintenance of a depen-
dent divorcee in these cases, there is a risk that opportunistic divorce will be encour- aged, along the lines described earlier. Divorce may become “too cheap” so that the
“greener-grass” phenomenon is generated, with some individuals tempted to initiate divorce knowing they will not have to compensate the divorced party, for whom liability
can be dumped on the state, for the lost standard of living. The “’black-widow” form of opportunism also could be encouraged, with some individuals divorcing because wel-
fare payments available to them seem generous, possibly in conjunction with the retention of assets or income from the marriage, compared with continuing in the
marriage. The state support may distort the attractiveness of sustaining a marriage compared with other options like adopting single status or remarrying.
The problem attached to such a distortion of incentives for couples is that marriage may seem a more uncertain state than would otherwise be the case. Changes in the
welfare system might suddenly remove the attractiveness of remaining married long after marriage occurred and when the marriage would otherwise continue. This could
cause some people to avoid marriage altogether e.g., “He could just dump me onto welfare in my 50s”. The state’s involvement is not just a matter of public finance.
Therefore, far from causing problems for private divorce settlements, statutory child- support requirements make it clear that the state will not indemnify marriages against
failure by picking up the bills for child support. This clear obligation becomes some- thing to be taken into account when entering marriage really on contemplating having
children because the obligation is independent of marital status and simply applies to parents. Also, the obligation can be established so as to prevent parents divorcing in a
manner that would impose costs on children. The support levels can be set to hold onto a reasonable lifestyle for the children, and a property rule like equal shares can
operate around child-maintenance obligations.
The conclusion just reached is undermined if child-support payments are set too generously, fail to take account of transfers of capital assets, or ignore benefits provided
by an absent parent. As might be expected, action by the CSA to obtain payments from absent parents mandatory when the caregiving parent claims income support has
come into conflict with the clean-break principle under which courts have awarded transfers of property in place of periodical payments. The courts seem to be beginning
to recognize the danger of double counting payments of capital and income when the CSA imposes a payment order on a pre-1991 case as in Smith v. McInerney.
14
The danger in ignoring capital payments made in lieu of child maintenance when enforcing CSA
rules is that private incentives to divorce will be distorted. Specifically, a black-widow incentive may arise during a period when courts are confused and persist in old-style
capital awards even though generous child-support payments are also being enforced. Some of those liable to be the principal carers of children may be tempted to divorce
if aggregate settlements suddenly become overgenerous as a result of a period of confused adaptation.
The area of needs-based child maintenance shows that care must be taken not to focus on the public finances to the exclusion of other considerations, particularly where
the distortion of private incentives may arise. There seems to have been an early period
14
Smith v. McInerney 1994 Family Law Review 2:1077 Order on appeal to return a cash lump sum and readjust-
ment of housing property transfer to offset subsequent action by the CSA.
546 Dnes
of applying the CSA when the state could be satisfied that it was controlling unwar- ranted subsidy of divorces involving children, but when it was guilty of “overkill’ in
ignoring past transfers of capital. No doubt this resulted from the CSA being targeted at all absent parents, not just the divorced ones. If one wrongly thinks no further than
the public finances, there is no reason to attend to ”oversupporting.“ However, the argument here is that it is important to think about the distortion of private incentives,
particularly if this could increase divorce rates when no increase is intended.
The above reservations aside, there is no reason in general to suppose that an obligation to meet children’s needs after divorce should conflict with a property rule
covering asset division. People will bear in mind the obligation when entering into marriage and writing prenuptial agreements. It would help them if the obligations are
well understood. The obligations, as it were, operate first, and everyone knows this. Thus, it can be assumed to be well known that there is an obligation to pay child support
and to meet housing needs of children at the point of bargaining. This amounts to a clear statement to the parties that they cannot impose costs on children or on the
taxpayer.
Housing need is in many ways the starting point of the current English law on postdivorce financial obligations, and the majority of cases do not reveal sufficient
family resources to go much beyond the allocation of housing to the spouse with responsibility for care of the children. This is particularly the case because the clean-
break principle favored transferring assets in lieu of periodical payments. Housing has typically been transferred to meet both the children’s and dependent ex-spouse’s
needs, using a Martin
15
order where there are too few assets to house both parties a life interest is created typically for the wife in a housing asset that technically remains the
property of both divorcees with sale delayed until she leaves, dies, or becomes depen- dent on another man. A variation is the Mesher
16
order, in which there are more assets and delaying sale of the house does not simply store up a problem: The life interest is
established until the children grow up. The courts can distinguish between allocating the rights to use a property from
allocating ownership of the property. After a move to a property rule for asset division, such a distinction could be maintained. Orders like the Mesher or the Martin could
continue to have a role. Consider the case in which the presumption was not rebutted in favor of equal shares in the marital assets and in which there were no assets other
than the marital home. Then ownership would be divided, but eventual sale would have to be delayed if there were too few assets to house all parties and the housing needs of
the children could only be met by keeping them in the former marital home. So really, the principle of distinguishing between rights to use and eventual ownership could
simply be maintained to safeguard adequate housing for children.
There is, therefore, no necessary conflict between meeting housing needs and estab- lishing a property rule such as equal shares of marital assets on divorce. Dangers may
exist if the court is insufficiently careful and overkills the problem of need. To avoid distorting incentives to divorce or remain married, the court really should divide assets,
if at all possible. People may be reasonably viewed as able to realize that marriage implies housing and other maintenance obligations toward any children of the mar-
15
Martin v. Martin 12, 1978 Fam 1977 3 All ER 762 protection of life-interest in residential property.
16
Mesher v. Mesher Hall 1980 1 All ER 126n, CA creating life interest in housing asset until children lose minority.
547 E
CONOMIC
A
NALYSIS AND
M
ARITAL
L
AW
riage. They may, therefore, be expected to enter prenuptial agreements aware of the commitments over housing needs.
The view taken here is that people should not be able to vary their currently statutory obligations over meeting the needs of children when negotiating a prenuptial
agreement. This would allow them to dump child-maintenance costs on the state or to impose costs on their children, which appears to run counter to current policy more
broadly interpreted. As discussed above, after the establishment of a property rule, there need be no distortion to private incentives, beyond those desirable from the point
of view of ensuring that people recognize their personal responsibilities, from enforcing certain baseline rules over meeting needs.
Thus, it would be more accurate to describe the type of community property rule contemplated here as an ”ordering“ in which certain needs must be met and thereafter
equal division of assets may be presumed unless altered by a prenuptial agreement. It is not expected that the needs part of the ordering can be negotiated.
17
It helps that the rule is contemplated as operating over the whole pool of assets. It may often be the case
that housing needs can be met for the parent with care and that other assets can be distributed to the absent parent so that a clean break is achieved for property while
sticking to the terms of a prenuptial agreement.
Even in cases in which assets are insufficient to do more than meet the needs of the parent with care, incentive problems need not arise providing that, at the time of
marriage, meeting need was seen as a minimum expectation to which typically wives and children would be entitled. Thus, marital expectations would be formed analo-
gously to the restricted contracts that may possibly be justified in areas like lending to the poor [Posner 1995]. The logic would be along the lines that at the point of
marriage it would be understood that the financially stronger party had an obligation to meet the needs of children and of the parent with care. That is a restriction placed
by society as a ”cost“ of entering marriage in the first place and will not be affected by subsequent behavior. The purpose is to prevent large costs being imposed on the
children or the taxpayer.
VIII. Focusing on Equal Shares
