Divorce, death and domicile

An overview of the dangers for the financially weaker party in divorce proceedings in England and Wales.

Increasingly sophisticated wealth planning means that, more often than not, situations can arise where a domicile outside of England and Wales of the wealthier party can leave the financially weaker spouse in a vulnerable position. Where a non-domiciled husband, for example, dies before the making of an ancillary relief order, no matter what was agreed between the parties in good faith, or already incorporated into a signed order, the wife can be left in an unfortunate and vulnerable position whereby she is not entitled, under English law, to what has been agreed. Her recourse under English law, and indeed the country of her husband’s domicile, may be limited.

Problem

The problem arises where the paying spouse is not domiciled in England and Wales and dies prior to the ancillary relief order being put in place. An already complex area of law becomes further complicated when uncertainty prevails over how his assets are dealt with, whether by an English will or otherwise. The wife’s claim for financial provision is only in that she then ranks as a widow; however the provisions of the Inheritance Provision for (Family and Dependants) Act 1975 (IPFD 1975) do not apply because the husband was not domiciled in England and Wales.

Options available to W when considering the possibility of H’s early death:

Do nothing

• H dies testate

The danger to W, if she does nothing and accepts the scenario set out above, is that if H dies prior to decree absolute and the existence of a finalised consent order from the Court (on the assumption that H’s will makes no provision for W, and of course it would prove a fruitless exercise to enquire as H is able at any point to change his will) W’s entitlement to provision from H’s estate, under English law, is very limited. Notably, W has no entitlement to claim under the Inheritance (Provision for Family and Dependants) Act 1975 because the provisions of the 1975 Act only apply if H were domiciled in England and Wales. The unfortunate situation that arises, then, is that even although W ranks as H’s widow, she is not included in H’s will nor is she entitled to make a claim under IPFDA 1975.

Her alternative then, is to make a claim under Irish law. This would involve making a claim in Ireland under Section 109 of the Irish Succession Act 1965. This provides that where the deceased dies wholly or partly testate, a spouse has a legal right to a portion of the estate. That portion includes Irish assets and UK movables. The ‘legal right’ amounts to 1/3 of these assets where the deceased has children (regardless of how many) with the remaining 2/3 shared between the children.

If H dies intestate, whether he leaves no will at all, an invalid will, or a will which does not deal with some of his assets, the only protection (albeit limited) for W is under the England and Irish intestacy rules. The English intestacy rules of course only come into play where H has no will at all, or has a will which does not deal with his English assets or has a will which only deals with his English assets in part, all of which are unlikely scenarios for the prudent businessman with considerable wealth. Further, the intestacy rules only apply to H’s UK real property. W’s entitlement is limited to the statutory legacy of £250,000 and a right to the income of one half of the remainder. Any English movables would be governed by the Irish intestacy rules, under which W receives 2/3 with the remaining 1/3 divided between the children.

Charge

The best possible protection to W in this circumstance is for H to allow her to register her charge immediately and not depending on a consent order or decree absolute. In this way, W ranks in the same way as an ordinary creditor and the priority of her charge is according to the normal rules of legal and equitable charges. If H objects, this obviously throws the whole agreement into doubt and the question then arises: if he agrees to the charge being registered in the consent order, then why not now?

Life cover

If H has any death insurance, it may be that he could nominate part of the policy to W, equal to the lump sum covered by the proposed charge. Alternatively, if he does not, it may be agreed that H take out an insurance policy to cover this eventuality. In this event, discussions would need to ensue about the payment of the premium.

Secured maintenance

Whilst security for the lump sum in the form of a charge provides some protection, the best result for W would be to have this together with security for her maintenance, until such time as the lump sum is paid. This needs to be over a different asset from that which the security for the lump sum is over.

Conclusion

When a client comes to their solicitor with already agreed arrangements which have been reached with her spouse with the familiar cry of ‘we just want it done as quickly as possible, everything is agreed’, it is the prudent solicitor who is aware of the circumstances that are outlined above. It is of course not the solicitor’s intention to make the situation protracted and acrimonious, however given the possibility, however remote, the client being left in a potentially incredibly vulnerable situation, it is one of which they must be made aware.

Ann Northover
Sara Freeman