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Published On: February 7, 2017 | Blog | 0 comments

Divorce and death the financial consequences

What happens if I die before my divorce is finalised?

Recently one of my clients asked me if they could leave their spouse the right to reside in their property until their divorce was finalised; is such a clause desirable or, feasible?

Answer: whilst it is possible to word a will clause that way the effect would not be as my client intended. If divorce proceedings are continuing but a decree absolute has not been pronounced the proceedings end immediately on death. This means that for inheritance purposes the marriage would still exist in law. Therefore, in the example given above the husband would have a right to live in the property indefinitely, probably for the duration of his life. This would not have been what my client wished. A way round this might be to give the spouse a reasonable period to reside in the property following the death of the first party.

It should be noted that the divorce proceedings come to an end on death, even in cases where the decree nisi has been pronounced. Legally you are not divorced until decree absolute. In practice many divorcing couples agree, on their lawyers’ advice, not to apply for the absolute until financial remedy proceedings are resolved between them.

What does this mean in practice? The surviving party to the marriage will be a widow or widower with all the usual entitlement to death benefits and pension rights. They will also be a spouse for the purposes of intestacy (if the deceased did not have a Will). The IHT exemption for gifts between husband and wives will also continue to apply.

What happens to divorce financial remedy proceedings if one party dies before they are resolved?

Technically the proceedings are stayed; effectively put on ice.    However, it might be possible for a claim to be made under the Inheritance Act see below.

A further point to note is that many people do not appreciate that divorce does not automatically terminate financial claims.  It is only when an order is made (whether by consent or not) where the parties claims for capital (and sometimes income) are terminated. Occasionally there are cases such as Wyatt v Vince [2016] EWHC1368 (FAM)  where there were no dismissal of claims in financial proceedings where one party might come back to court seeking a financial settlement many years after the divorce. In the Wyatt case Ms Wyatt applied for financial provision 19 years after her divorce. By that time Mr Vince had a fortunate of £57m. Ms Wyatt was granted permission to appeal by the Supreme Court and in due course received a modest lump sum.

Expediting decree absolute

Normally the petitioner can apply for a decree nisi to be made absolute 6 weeks after the date of a decree nisi. In a case where someone is terminally ill they may wish to consider expediting the decree absolute, especially if they wish to remarry. This necessitates an application to the court and a short hearing.

Death after financial proceedings have been concluded

If financial proceedings have been concluded and the final decree has been pronounced, then any court order which has been made will still be enforceable by the deceased’s personal representatives (or administrators if no Will). Any spousal maintenance will be lost as this normally terminates on the death of the recipient. Child maintenance will continue. However, in many cases the children will move to live with their surviving parent.

If a generous court order has been made which, for example, allows the deceased to have retained a large portion of the family assets then it may be possible for the survivor to apply to set aside the order depending on their financial circumstances. Family lawyers regard deaths shortly after an order was made as a “Barder” event after the name of the case where such events occurred. In the Barder case (Barder v Calouri [1988] AC 20) the wife committed suicide and killed the children shortly after the order had been made. The husband applied for leave to appeal out of time. He was successful.

The Inheritance (Provision for Family and Dependants) Act 1975

This Act provides that certain applicants, who were dependent on the deceased, including a bereaved spouse (or former spouse) can apply under this Act. Moreover, if the death occurs within 12 months of the divorce the court can treat the parties as if they were still married. Such claims should be made promptly within 6 months of death or probate being granted.

In the case of Reid v Reid [2004] 1FLR736 a wife was awarded £99,000 on a clean break basis.  She had disclosed the fact that she suffered from ill health.  Just 15 days after the decree absolute was made she died.  The husband sought leave to appeal out of time.  The court held that her death two months after the order was a new event and attracted “Barder” principles.  The wife’s death was not reasonably foreseeable; the husband’s needs had not been fully met by the order and the wife’s death had invalidated the parties’ perceptions of her needs.  The husband would receive a lump sum of £37,000.

The executor’s arguments based on entitlement and contributions were not appropriate were assets were very limited.

However in the case of Amei v Amei [1992] 2FLR89 the parties had reached an agreement between them which they had intended to have approved by way of a consent order.  However before they could do so the wife died.  The husband sought to set aside the agreement.  It was held that the mere fact of the wife’s death was not sufficient; the agreement had been a fair distribution of assets on the basis of the wife’s entitlement.  The only basis for setting the agreement aside would be if death had undermined the fundamental assumptions on which the order was made.

In the case of Barber v Barber [1993] 1FLR476, CA an order was made for a wife to receive more than half the sale proceeds of the family home on the assumption that, although she was ill, she had at least 5 years to live.  She died just 3 months after the order was made.  The order was set aside in part on the ground that its fundamental basis had been invalidated.  It was held that the appropriate approach would be to start again and make an order on the basis of what the court would have done had it known, at the date of the order, what it now knew.

* Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*

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