Divorce and the elderly

A growing number of divorce cases between elderly couples have highlighted specific problems facing this group. Sian Hodgson explores the issues, including death before decree absolute.

The dynamics of our population are changing. In 1981, the life expectancy for an average male in the UK was 70.8, according to figures from the Office for National Statistics. By 2003 this had increased to 76.3. For women, average life expectancy in 1981 was 76.8. By 2003 this had increased to 80.7. Further ONS statistics show that while the number of divorces may not have increased significantly from 1981 to 2005, the proportion of divorces among the over 60s has increased. For example, in 1981, 3.7 per cent of all men divorcing were over 60. In 2005, this proportion rose to 5.7 per cent. In 1981, 2.6 per cent of all women divorcing were over 60. In 2005, this had increased to 3.3 per cent. Similarly, the mean age at divorce increased for men from 37.7 in 1981 to 43.1 in 2005, and for women from 35.2 in 1981 to 40.6 in 2005.

Explaining the rate rise
So what do the above figures tell us? Well, firstly, something that will not come as a surprise to anyone – the population is generally getting older. We have better healthcare, a better diet and better working conditions than we have had in the past. As a result, life expectancy has increased.

Second, while the number of divorces themselves have not increased dramatically, divorce has become more common for the elderly. There are many possible reasons for this. Divorce is becoming more “socially acceptable”, particularly among the older generation for whom divorce has in the past not been an option. Couples who have been in long, unhappy marriages are more likely to consider divorce today than in their parents’ or grandparents’ day.

On the whole, couples today are more financially secure than ever before. We are, as a nation, wealthier per head than we have been in past generations. Whereas in the past, limited resources may have left couples financially tied, increased resources, whether through paid income, welfare benefits or capital growth from increasing property prices, have allowed couples to achieve financial independence from each other.

Finally, second and even third or more marriages are not uncommon, with parties marrying at a later age.

Again, statistics have shown that more later marriages tend to end in divorce than first marriages – and parties in second or third marriages ending in divorce are likely to be, on average, older than those in first marriages.

Issues specific to elderly divorcing couples
In general, the same principles apply on divorce whatever the age of the divorcing couple. A court will take into account the factors outlined in section 25 of the Matrimonial Causes Act 1973 when considering what provision to make for each spouse. These naturally include the financial needs and resources of each spouse.

However, there are certain issues which are more likely to arise for a divorcing elderly couple, and other issues that might take on increasing relevance, such as inheritance issues and tax planning.

While making a will is something all clients should be encouraged to do, this is particularly important for elderly divorcing clients. Clients may not be aware that even though they are divorcing their spouse, a will that is current and valid will remain so. Do they still want their ex-spouse to benefit on their death? If they do not have a current will, are they happy with the way in which their estate will pass under the intestacy rules? Who will inherit in the absence of a spouse? Are they aware of the claims that a current or ex-spouse can bring against their estate under the Inheritance (Provision for Family and Dependants) Act 1975? This Act allows certain categories of claimant to bring a claim against the estate of a deceased where reasonable financial provision has not been made for them either under the will or intestacy of the deceased.

By considering such issues at the time of the divorce, it may be possible to avoid the potential for any post-death claims.

Clients should also be encouraged, when addressing their finances on divorce, to consider tax planning. As a result of the divorce, the spouse exemption for inheritance purposes will no longer apply and therefore inheritance tax will be payable on the balance of the client’s estate over and above the nil rate band. This may be something that a client has not considered before. It may be that, prior to the divorce, most of their property was jointly owned with their former spouse and would have automatically passed to their former spouse without any inheritance tax being due. It may be appropriate therefore, to also provide a client with
tax-planning advice.

Death of a party during divorce proceedings
The position where one party dies during divorce proceedings should not be overlooked. While this is not exclusively a risk for the elderly client, if a client is elderly and infirm, or if their spouse is elderly or infirm, then particular care should be taken to advise the client of the position should they or their spouse pass away during the divorce proceedings.

The courts have held (Hall v Hall (2002) LTL 20/3/02 – not reported elsewhere) that the age and ill health of one of the parties does not warrant a departure from the usual rule that decree absolute cannot be made where an application for ancillary relief is still pending. Therefore, an application for decree absolute cannot be expedited because of the possibility of one party dying while financial matters between the parties remain unresolved.

Advice to a client in these circumstances should not therefore be limited to advice in relation to the divorce proceedings, but must deal also with the potential impact of one of the parties’ deaths. What protection can be provided for a client where financial matters remain outstanding, but where that client’s spouse is close to death?

Similarly, what is the position where one of the parties to the divorce dies during the divorce proceedings, after a division of the assets has been achieved by way of an ancillary relief order but before decree absolute has been obtained? Is the surviving client protected by the ancillary relief order? It may be tempting at this stage to consider that because such an order has been obtained, that is the end of the matter and a client’s position is adequately protected. This is not necessarily the case.

The first question to consider is whether the client and the deceased were still married at the date of death. To all intents and purposes, the divorce may appear to have been completed. But, a spouse remains a spouse until decree absolute. The parties are therefore still married.

So what is the status of the ancillary relief order? This was considered by the courts in the case of McMinn v McMinn (Ancillary Relief : Death of a Party to proceedings) [2002] EWHC 1194. In this case, the court considered whether the wife’s claim for ancillary relief survived the death of her husband under section 1 of the Law Reform (Miscellaneous Provisions) Act 1934. The court found that it did not. An ancillary relief order does not take effect and therefore cannot be enforced until decree absolute has been obtained. Therefore, in these circumstances the ancillary relief order falls away despite the fact that not uncommonly, a great deal of time and costs may have gone into obtaining the order in the first place. The surviving spouse must look to the deceased’s will or intestacy in order to see what financial provision will be made for them.

Hopefully, the surviving spouse will be provided for under the deceased’s will or intestacy. However, this is not always the case. Remember, the parties were in the middle of what could have been very acrimonious divorce proceedings. The deceased could have executed a new will during the course of the divorce proceedings specifically excluding the surviving spouse. What happens then?

It is in these circumstances that the Inheritance (Provision for Family and Dependants) Act 1975, which we touched on earlier, comes into its own. The surviving spouse is able to make a claim under section 1(1) of the Act on the ground that reasonable financial provision was not made for him/her under the deceased’s estate.

But what if a section 15 order had been included in the ancillary relief order precluding the surviving spouse from making a claim? That may well have been the intention of the parties, but as we have seen from McMinn, the ancillary relief order is not enforceable and it must therefore follow that the section 15 order will also not be enforceable.

The surviving spouse’s claim under the Act would be for “such financial provision as would be reasonable for him/her to receive whether or not that provision would be required for his/her maintenance”. Unless a reasonably high value of assets, for example, life policies or pension policies, have passed to the surviving spouse outside the net estate, it should be relatively easy to ascertain that reasonable financial provision has not been made for that spouse, particularly if they were left out of the deceased’s will altogether.

Once this has been established, on considering what award to make, the court will consider all the factors in section 3 of the Act, namely:

The financial resources and needs of the surviving spouse, both now and in the foreseeable future;
The financial needs and resources of any beneficiary under the deceased’s will or intestacy, both now and in the foreseeable future;
The financial needs and resources of any other claimant, both now and in the foreseeable future;
The size and nature of the estate;
Any physical or mental disabilities of any party; (although note that old age is in itself not a disability);
The final “catch-all” of any other matter.

In addition, the court will also consider the special factors in section 3(2), namely the age of the spouse, the duration of the marriage and any contribution made by the surviving spouse to the welfare of the family. Finally the court will also have regard to what provision the surviving spouse would have received on the date of death had the marriage ended in divorce rather than on the death of one of the parties. This is commonly known as the “deemed divorce” test. So we have come full circle, back to the divorce again.

It may be tempting to think that since an ancillary relief order had been obtained in the divorce proceedings, then this should simply apply now to the assets of the estate following the “deemed divorce” test. Indeed, if circumstances have not changed since the ancillary relief order was made, then this may be true.

However, care should be taken with this approach. The “deemed divorce” test is only one of a number of factors which the court should consider. Further, the test will apply to the value of the assets within the estate at the time of any hearing of a claim under the 1975 Act, and not to the value of the couple’s joint assets at the time that the ancillary relief order was made. These two values could be very different. If one of the major assets in the estate is a property, then it is highly possible that the value of the property could have increased significantly since the ancillary relief order was made. Similarly, as a result of the deceased’s death, pension or life policies could have become payable, thereby increasing the value of the assets available to the surviving spouse.

In McNulty v McNulty [2002] WTLR 737, Launcelot Henderson QC, sitting as a Deputy High Court Judge, observed that it would often be appropriate to award a higher sum to the surviving spouse than they would have received on a notional divorce. He reasoned that the position after the divorce was that both parties had to be provided for, whereas on death there is only one surviving spouse. Our fictional spouse in this matter could therefore achieve more by a claim under the 1975 Act than he/she would have done on divorce. However, this is likely to be at a cost, namely the requirement for further proceedings post death.

What protection can be provided to the client?
So what should we be advising elderly clients who have come for advice on divorce? First, and perhaps most importantly, advice should not be given to any client, and particularly an elderly client, about divorce in isolation. Divorce necessarily impacts on a client’s financial position in the present and in the future. One needs to consider the client’s current testamentary planning (and what impact any testamentary planning of their spouse will have).

Clients need to be aware that, even if an ancillary relief order is obtained, or even if a settlement has been achieved, then this will not be binding until decree absolute has been obtained. Clients need to be reminded during divorce proceedings of the importance of making wills and keeping them regularly updated at each and every stage of the divorce proceedings. They should be made aware of the effect of the 1975 Act, and of any claims which could be brought against their estate, or any claims they could make against their deceased spouse’s estate.

For many elderly clients who have been in long marriages, and whose finances have always been jointly controlled in the past with their spouse (or even by their spouse), an analysis of their finances in the context of divorce proceedings may be the first time that they have considered in any detail what resources are available to them and what financial needs they have. Similarly it may be the first time that they have considered any future financial planning or testamentary planning and therefore it is essential that a review of all pre and post-death (either of them or their spouse) scenarios be conducted in the context of divorce proceedings. n

Sian Hodgson is a solicitor at Charles Russell LLP. She can be contacted at sian.hodgson@charlesrussell.co.uk