Category: Financial Orders

Brexit Divorce Dilemma For Property Owning Couples

With Brexit looming large in March property prices may see a dramatic readjustment that could go one way or the other depending on the outcome. This may not be an issue for those not planning on moving anytime soon but for couples on the edge of divorce there is now a dilemma.  

Property prices to a great extent are driven by a mixture of national sentiment, the availability of credit and seismic shocks to the economy. The financial crisis of 2008 for example brought prices tumbling across the country and many areas are still yet to recover.  

According to the Governor of the Bank of England, Mark Carney, a no deal Brexit could see prices fall by 35% in three years. Whether this actually turns out to be the case is another matter. Forecasts by the Bank of England aren’t always as accurate as the weather forecast and then there is the prospect that we get a deal, everything is forgotten and there is a boom in house prices.  

So the dilemma for divorcing couples where property biggest is their biggest asset is whether to go ahead with the process of divorce and risk selling and dividing up a property at a potential loss, or speed up the process in the hope that advantage can be taken of more favourable market conditions. 

Depending on the view of the person thinking of filing for divorce, the strategy may be to wait until all the fuss is over before proceeding.

What happens to a financial settlement if my spouse/civil partner dies during divorce proceedings?

Going through a divorce can be emotionally distressing and challenging however, in the event one spouse/civil partner dies during or shortly after proceedings it can bring an added element of complication. Although the death of a spouse/civil partner during proceedings is a rare occurrence, parties must be aware of the issues to consider depending on the stage divorce proceedings have reached at the time of death. We have outlined potential stages and the relevant issues to consider below:

1. A Consent Order has been sealed (subject to Decree Absolute) and spouse dies before Decree Absolute has been pronounced.

The Court only has the power to make financial provision and property adjustment orders on granting a Decree Absolute. Therefore, it is standard practice to draft Consent Orders in proceedings for a financial remedy as either being ‘subject to Decree Absolute’ or ‘with effect from Decree Absolute’.

A Consent Order becomes null and void if a spouse/civil partner dies after the order is perfected and sealed, but before Decree Absolute.

This principle was considered in the case of McMinn v McMinn, whereby the executors of a wife who had been killed by her husband sought to enforce an order made against the husband in ancillary relief proceedings where there was no Decree Absolute. The executors application was unfortunately dismissed due to the fact section 25(3) of the Matrimonial Causes Act 1973 clearly provides that only a Decree Absolute could make the order for ancillary relief effective. As it was the death that ended the marriage, it could not be dissolved through the courts.

2. A Financial Order has been made which is not subject to Decree Absolute or Decree Absolute has already been pronounced.

The Court may make certain other specified orders to take effect before Decree Absolute such as orders for costs, maintenance pending suit or pension sharing orders.

In the case of Christina Estrada (as reported in our earlier blog post: http://lundbennett.co.uk/blog/miss-estrada-may-have-to-sue-her-own-step-daughter-in-order-to-recover-her-multi-million-pound-financial-settlement-after-former-husbands-death/ ) Ms Estrada was awarded £53million by way of financial settlement following the parties’ Saudi divorce which became absolute in December 2014. Unfortunately her husband, Dr Juffali, died nine days before the date he was due to transfer the money pursuant to the Order. As the Order had already become legally binding, this established a formal debt which could be sued upon. Dr Juffali had an unfulfilled financial obligation which, on his death became the responsibility of his executors.

1. No Financial Order has been made.

If a spouse/civil partner dies after divorce proceedings have been issued but before a financial order, the situation is more complex.
In the recent case of Mr & Mrs Vindis. Mr Vindis died two months after divorce proceedings had been issued but financial matters were unresolved. As the parties were still married, Mrs Vindis became a widow. Mr Vindis had assets of approximately £12million but had left his wife only £36,000 in his Will. As no financial order had been made in the divorce there was no ‘debt’ owing to Mrs Vindis and she therefore had to bring a claim against her husband’s estate under the Inheritance (Provision for Family and Dependants) Act 1975.
In the event your spouse/civil partner dies during divorce proceedings but prior to a financial order being granted you should first ascertain the contents of your spouse/civil partner’s Will. If you have been sufficiently provided for in the Will (and your spouse/civil partner has not remembered to update their Will upon separation), the executors of the estate are obliged to follow the terms of the Will even if divorce proceedings were ongoing.
If you have not been sufficiently provided for in the Will, you may need to follow in Mrs Vindis’ footsteps and bring a claim under the Inheritance (Provision for Family and Dependants) Act 1975. When dealing with such claims, the court consider a number of factors, including the length of the marriage, contributions made and the financial resources and needs of the applicant. The court will also look at what the applicant would have been likely to receive in the event that marriage had ended by Decree Absolute, rather than one spouse/civil partner’s death.
If you are concerned about dealing with financial matters upon separation or would like to discuss any of the issues outlined in this post please contact a member of our team for more advice today on 0161 927 3118.

Law Commission calls for tougher enforcement of family financial orders

It is estimated that millions of pounds go unpaid every year as a result of non-compliance with financial remedy orders. The Law Commission has called for a cultural change to ensure that family financial orders are enforced more effectively as family financial orders are an important yet often overlooked area of law. The Law Commission’s report has been welcomed by family practitioners.

Family financial orders are usually made upon the ending of a marriage or civil partnership that require a payment of money, or the transfer of property, between former spouses or civil partners. Orders can also be made between parents for the benefit of the children of the family. The Law Commission found that people tend to think the process is over once a financial order has been made. The Commission has said that ‘Enforcement of that order is unlikely to be at the forefront of people’s minds. There is an expectation that people will comply with court orders’.

Recommendations made by the Law Commission to improve enforcement include making three types of asset more accessible to the court to discharge the debt:

1. The debtor’s pension;
2. Funds held in joint accounts;
3. Money that will become payable to the debtor in the future.

The Commission also suggests more effective coercive methods of enforcement such as disqualifying debtors from driving or ban them from travelling out of the UK. A Ministry of Justice spokesperson has said that they ‘welcome the report and will consider its recommendations carefully’.

We have considerable experience in dealing with the enforcement of family financial orders so if you have failed to comply with the terms of a financial order or your former partner has breached the terms of the order then we recommend that you seek legal advice promptly. Our specialist team will be able to advise you of your options and the potential consequences. Please contact us today on 0161 927 3118.