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Divorcing Couples, Death, and the Inheritance Act 1975
Date: 22/11/2023 Type: Articles Topic: Private Client | Investment and HNWI’s |When a separated couple are going through a divorce, it is good practise for both parties to execute a new Will, in the light of the effect a divorce has on a person's Will.
The timing of the execution of that new Will is likely to vary depending on the circumstances or the advice received at the time. It may be executed prior to the divorce proceedings being formally issued, midway through the process (for example, after a financial settlement has been reached), or on conclusion of the matrimonial proceedings.
A complex situation may arise where one spouse passes away before the divorce proceedings are finalised. Neither separation nor a decree nisi legally end a marriage. Until the court has issued a decree absolute, the couple remain legally married. After the death of one party, divorce proceedings cannot continue. The parties will therefore be treated as having been married on the date of deceased spouse's death (Parish v Sharman [2001] WTLR 593).
Almost all financial settlements reached between the divorcing parties only take effect upon the issue of the decree absolute, so where does that leave the surviving spouse?
If the deceased spouse died without a Will, the surviving spouse's entitlement will be dictated by the intestacy rules. If the spouse died having no children, the surviving spouse, will inherit the entire estate by intestacy. This would be the case despite the couple's separation and imminent divorce.
If the deceased spouse died leaving children the rules dictate that the surviving spouse will take all the deceased's personal property, a £322,000 legacy, and half of the remaining estate in the Deceased’s sole name. The other half of the estate will pass to the deceased’s children in equal shares.
Neither situation is likely to reflect the deceased's true testamentary wishes relative to the circumstances at the time. This could potentially give rise to claims by disappointed beneficiaries in such cases, however, that topic requires a discussion of its own!
If, however, the deceased spouse had made a new Will in consideration of the couple's imminent divorce, it is likely that those testamentary wishes will not make reasonable financial provision for the surviving spouse.
Where the divorce proceedings are underway, the Family Court may have made a financial order prior to the deceased spouse's death. Such an order often includes a term that neither party may bring a claim against the other's estate under the Inheritance Act. As almost all financial settlements only take effect upon the issue of the decree absolute however, a claim under the Inheritance (Provision for Family and Dependants) Act 1975 (the "1975 Act") will therefore be available to the surviving spouse.
An application by a surviving spouse for reasonable financial provision from the estate is assessed by the court on a 'higher' standard compared to other applicants. That is, what constitutes 'reasonable financial provision' for the surviving spouse is not limited to what is required for the spouse's maintenance but as against what is reasonable in all of the circumstances.
In considering the surviving spouse's claim, the court will take into account, amongst many other things:
a. the age of the applicant;
b. the duration of the marriage; and
c. the applicant's contribution to the welfare of the family, including any contribution made by looking after the home or caring for the family.
In doing this, the court will consider the provision which, on the deceased spouse's date of death, the applicant might reasonably have expected to receive if the marriage had been terminated by divorce rather than death. The Law Commission has confirmed that the 'deemed divorce fiction' neither sets a 'ceiling' nor a 'floor' on the provision which may be made.
In practice therefore the court may use its discretion to award the survivor of the couple more than they would have received on divorce. A justification for this is that, on divorce, the court has to consider the financial needs of two living parties. Following the death of a spouse, however, such an assessment is no longer necessary as only the surviving spouse will have a housing and financial need.
An award for provision is, of course, considered in all the circumstances. The ongoing divorce proceedings and the existence of a financial order and any pre-nuptial agreements may play into the court's decision in considering what would be reasonable financial provision for the surviving spouse.
The court will consider the applicant's position as the surviving spouse amongst the other factors prescribed by statute (the "Section 3 Factors").The beneficiaries may defend the application by reference to the Section 3 Factors which include inter alia the financial resources and financial needs which any beneficiary has or is likely to have in the foreseeable future, the size and nature of the net estate, any physical or mental disability of the applicant or any beneficiary, and any other matter including the conduct of any person which court may consider relevant.
Consideration of these factors will guide the court in departing from the notional divorce standard, particularly where a beneficiary of the estate has a competing financial need.
What, if anything, may a former spouse be entitled to if the divorce had been finalised at the time of the death?
As noted above, usually the surviving spouse will have a restriction imposed by a financial order of the Family Court to bring a claim under the 1975 Act. There is, however, an exception. This is in circumstances where a party to the marriage dies and:
i. the date of the death is within twelve months from the date on which a decree of divorce or nullity of marriage has been made absolute or a decree of judicial separation has been granted; and
a. an application for a financial provision order under section 23 of the Matrimonial Causes Act 1973 or a property adjustment order under section 24 of that MCA 1973 has not been made by the other party to that marriage, or
b. such an application has been made but the proceedings thereon have not been determined at the time of the death of the deceased.
In such circumstances, the former spouse may make an application under section 2 of the 1975 Act. The court at its discretion may treat the applicant as if the decree of divorce or nullity of marriage had not been made absolute or the decree of judicial separation had not been granted. This grants the former spouse entitlement to bring a claim for financial provision from the estate under the 1975 Act.
A former spouse who has subsequently remarried will not be entitled to bring a claim under the 1975 Act against their former spouse's estate.
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Author
Emily Peacock & Emma Bryson - Michelmores
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