Consent orders, divorce debt & death
By:0 commentsApril 8, 2017
ASK A FAMILY LAWYER
In this regular column, Stowe Family Law solicitors answer readers’ questions on different legal issues. Today’s query goes to Neil Dring, a solicitor in our Wetherby office. If you have a question, send it to email@example.com.
“In my consent order I was given the marital home and my ex had the two apartments in France. Also my ex was supposed to pay me £20k. I have never pursued this payment as I knew that he couldn’t afford it. He keeps telling me that he will repay this at £1,000 every year on 1 April, but I have not had any payments yet.
Question: If he dies before I get this money will the consent order be paid to me before anything else is paid to his two daughters? Or will this die with him?”
The very real likelihood is that the £20,000 that is due to you amounts to a legally binding capital debt that will form one of the liabilities of your former husband’s estate if it is not paid before his future death. If that is the case then it would be a debt that must be paid to you from the gross estate before the remainder is distributed between his daughters or any other beneficiaries under the terms of his will, or to his “next of kin” if he dies without making a will.
However, that is based on certain assumptions that we need to check before we can be sure.
Firstly, you say that you obtained a consent order. We need to be quite clear that this consent order was not just agreed between yourself and your husband, but was also formally and officially approved and ‘signed off’ by a district judge of the divorce court. An approved order is legally enforceable in the way that an informal agreement is not (even if written).
We also need to check that after the consent order was approved by the court, you then went on to obtain your decree absolute of divorce. It is very common when going through divorce proceedings to wait until after a financial settlement has been reached and a court order made before obtaining the decree absolute. The simple reason for this is that there are often situations where you might have legal entitlements under your husband’s financial arrangements simply as a result of being married to him. The most common and important of these is under the terms of any pension scheme that your husband might have. Ordinarily pensions will include provision for substantial payments to be made to a surviving spouse. As part of the divorce process you want to ensure that some settlement is made in your favour to “compensate” for the loss of your future benefits under that pension scheme. If, however, your husband were to die before that settlement was reached, then provided you remain married at that time, you also remain entitled as surviving spouse under the pension scheme itself. However if you have obtained your decree absolute beforehand you lose that entitlement.
It is, therefore, common to wait until after a financial settlement has been concluded before obtaining the decree absolute. However, you have to remember then to obtain the decree absolute after the consent order has been made. The reason for this is that any clause in a court order that provides for a capital settlement or a lump sum order only becomes legally enforceable once decree absolute has been pronounced. So, if you haven’t yet obtained your decree absolute you should now do so. The fact that you might have delayed for up to four years is not a problem. You do not have to apply for the decree absolute within a specific period of time.
I also assume that the order that was made was for a single, one-off payment of a lump sum of £20,000, rather than staggered payments over time. If so then it does become a fixed debt that will be a liability of the estate on his future death. What is more, the amount of the debt will have increased to include interest. The order will provide for a date by which the payment should be made. If it does not, then it becomes payable on the date of decree absolute. Under the normal rules of the court, if the payment is not made by the due date then you are entitled to interest on the lump sum at the so-called ‘court rate’. Currently that court rate is a very generous eight per cent, amounting to £1,600 every year that payment is delayed.
The position might be different if the court order provides not for a single lump sum payment of £20,000, but for payment of that sum by instalments of £1,000 every year, in the way that you suggest had been discussed by former husband. If provision for payment by instalments was incorporated into the court order, then your former husband would be able to apply to the court to ‘vary’ (i.e change), or even to suspend, payment of the outstanding instalments if a change in his financial circumstances makes that now unaffordable. That is an important reason why any person entitled to receive a lump sum payment should try to avoid an order for payment by instalments. However, your former husband would have to make the application for the variation himself before he dies. If he fails to do so, then his estate could not make that application after his death. The whole of the outstanding lump sum would still remain a legal debt that would have to be paid out of the estate before the remainder is distributed to the beneficiaries under the terms of his will.
Finally, you do not specifically mention whether the court order which included the property transfer and lump sum payment was on the basis of a maintenance ‘clean break’. If not, and if there is a continuing maintenance order in your favour, then you may be able to bring an additional claim against his estate if your former husband’s will does not make reasonable financial provision for you, in order to compensate for to loss of future maintenance payments that will cease on his death. However, that might be a topic to be looked at in more detail on another day.
April 8, 2017
Categories: Ask A Family Lawyer