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Divorce, intestacy rules and the need for a financial agreement

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Divorce, intestacy and need for a financial agreement.

Getting divorced quickly is often seen as a plus, but not if you fail to sort out the finances as this case study shows.

As family law solicitors we deal with people is some very upsetting stages of their life. Divorce itself can be very difficult for many, from an emotional point of view. But the emotions and a desire to get things sorted quickly can unfortunately have untold consequences. A recent case I was involved in illustrates my point. I was approached by a lady who had divorced a number of years before. Her relationship with her husband at the time was very poor and she wanted to divorce quickly, she felt for the sake of her two young children. 

She applied for her decree absolute to dissolve her marriage before sorting out an agreement about how she and her husband were going to share the matrimonial finances. She was still negotiating the financial settlement with her husband when, only a few months after her decree absolute, unexpectedly and very suddenly, her young ex-husband died without a leaving a Will. 

Unforeseen consequences of failing to agree a financial settlement on divorce

As an ex-wife with no financial agreement in place she was left in a very difficult position. If she had still been his wife when he died, she would have inherited his estate under the intestacy rules. She would have received the house, the death in service benefit under his pension scheme and the payment from his life insurance policy. 

Had they reached a divorce settlement and obtained a financial order from the court before dissolving her marriage, she would most likely have received a large share of the equity in the house, a share of his pension and some maintenance. The financial order would have taken into account her need to house herself and the children and meet her reasonable outgoings. 

However, because she was no longer his wife and because there was no financial order in place, everything her husband’s owned went to their two young children. As she was now the sole carer of the children, you’d think there was no problem. However, as the children were under 18 their inheritance was left in trust and a trustee was required to manage the estate for them. The husband's sister assumed this role. 

Because all of the husband’s estate had gone into trust for the children, their mother had no means to meet the cost of childcare whilst she worked and she needed the extra capital from the husband’s share of the house to buy a suitable home for her and children. Her only option was to make a claim against the estate which involved protracted court proceedings. When I met her these court proceedings had been going on for a number of years and the costs stood at tens of thousands of pounds. And all because there was no formal financial agreement reached before the divorce was finalised.

As this unfortunate case study shows, when going through divorce proceedings, even if both parties to a marriage are young or even if the pot of matrimonial assets is believed to be very small, you should always speak to a specialist family lawyer before applying for your decree absolute. We always advise clients to come to an agreement about their finances before the divorce is finalised and get a formal agreement, a consent order drawn up. That way when something unfortunate or unforeseen happens the negative financial consequences are kept to a minimum.

Sian Winter
Family law solicitor Bicester

(For reasons of confidentiality some of the details in this case study have been changed) 

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