Unforeseen consequences: A recent family case study of estate planning and divorce settlements

Tomas Cesme v Marisa Salandron – a case that highlights a number of facile ways in which decisions made in a more recent family situation can lead to unforeseen consequences, both during the life of the parties but also postmortem, even to the extent of overturning the judgment made for a particular individual .

background

In this 2021 reported case, the deceased married his first wife, Sheila, in 1984. He then purchased property under his sole name in 1986 and he and Sheila moved in. By 1993, their son, Thomas, was born. The property in question thus became the family home. Later by the year 2000, the deceased was working abroad and during that time he developed a relationship with a woman who later became his second wife, Marissa.

After learning of the decedent’s affair with Marissa, Sheila and Thomas moved out of the property in 2005. It appears that Sheila and the decedent never settled their financial affairs and the property remained in the decedent’s sole name.

In October 2008, the deceased and Marissa had a baby boy, John, and as a family, the deceased, Marissa and John, moved back to live in the UK in 2012. They moved into the property, which, of course, was vacant at the time. No settlement was reached between the deceased and Sheila after their separation.

in 5^y In December 2013, a decree was issued in the divorce proceedings between the deceased and Sheila, and after some discussion between them they came to an agreement, which was documented in a financial consent order which was subsequently approved by the County Magistrate at Nottingham County Court.

Within concerts, the writ of consent made a covenant that the deceased would immediately and irrevocably execute an act in the form attached to this covenant with Sheila to leave the property by will to Thomas. He stated that the promise is binding on his heirs.

at 12^y In March 2017, the deceased signed a will, part of which stated that there was a will for the property to Thomas as per his earlier pledge.

In July 2019, about two years later, the deceased was diagnosed with a terminal illness and as a direct result of this and with the intent of ensuring that Marissa would receive an allowance under his pension, the deceased and Marisa got married on the 9th.^y October 2019. The effect of this marriage was the annulment of the 12th commandment^y March 2017 means that by the 28th^y January 2020, the date of death of the deceased, he died without a valid will and his estate ceased to be distributed according to the rules of guardianship. One must assume here that he only considered the fact that he wanted Marissa to benefit from his death in the service, but did not appreciate that his marriage would nullify his previous will which had cemented the judgment for Thomas as provided for in the divorce colony.

at 13^y In May 2020, Marissa, as the surviving spouse, obtained the grant of letters of administration and transferred the property to her sole name on the assumption that, in light of the fact that the previous will was revoked, she would be entitled to the estate.

The estate was modest, totaling £203,000, but the property value amounted to about £190,000 of that whole amount. As such, Marissa was to inherit the entire estate including the house that was previously intended to be passed on to Thomas.

As for the lawsuits that the judge had to decide on this matter, they are:

1. Thomas sought specific performance of the agreement in the deed of covenant or as an alternative to having an effective declaration under which the property was held in trust to him. This was in fact seeking to clarify whether the covenant could be carried out.
2. Marissa opposed this on the grounds that the document did not comply with Section 2(1) of the Property Law (Miscellaneous Provisions) Act which requires any transfer of land to be in writing. It also denied the existence of a constructive trust.
3. Marissa also made a claim under the Inheritance (Provision for Family and Dependents) Act 1975 (“IHA”) so that, should the court allow Thomas’ claim, she could seek to recover enough of the estate to meet her needs. If Thomas’ claim were successful, she would inherit very little, and as a surviving spouse she would clearly have a right to sue under that jurisdiction.

By filing a claim under the IHA, Marissa was able to invoke Section 11 of that law – a not very commonly used provision. In the event that the court finds that all of the factors listed below have been met, they will have the ability to recover any property subject to the trust. The questions asked by the court were:

1. Did the reducer conclude a contract agreeing to leave the property by will?
2. Has he entered into a contract with a view to overcoming any potential claims under inheritance law?
3. Was full consideration given?
4. Does the issuance of an order facilitate the provision of financial allocations under the inheritance law?

If these conditions are met, these conditions will allow the court to use the property to provide a reasonable financial provision to the surviving spouse regardless of the financial order made in the divorce proceedings.

The case was unusual for a number of reasons. By the time the consent order was negotiated, the deceased was living with his then-girlfriend and she was aware of its contents, and had already signed the consent order. There were a number of emails going between the deceased and his first wife, Sheila. These emails allowed the court to find that the divorce settlement was “collusive” and was actually made with the aim of nullifying a potential claim under inheritance law. This allowed the judge to determine whether she was entitled to pursue a divorce order and to determine whether or not it was just. It then considered whether full consideration had been given to the divorce settlement and established that on the grounds that the property settlement over Thomas removed any risk of a pension-sharing order, the deceased’s pension is substantial.

In this particular case, the decision was ultimately in favor of Thomas, as the court held that the covenant was in fact in compliance with Section S2 of the Property Act (Miscellaneous Provisions) and was enforceable. Moreover, when it was read with the consent order, it was taken into account that the first wife had given up a share in the pension. In short, Marissa could not prove that Sheila did not give full consideration to the covenant deed, and so the Section 11 claim should fail. However, for marital practitioners, even though the initial divorce settlement was upheld in this particular case, it is clear that there are significant risks if The decision was different.

It appears that this situation could add a layer of uncertainty about the value of reaching a settlement within divorce proceedings where property is pledged to be left by Will.

The key here is that the court felt able to follow through on the financial approval order. Had Marissa been able to convince the court that there was no significant consideration, the decision would have been taken the other way. This would have left the first wife and Thomas without what was essentially the principal benefit of the financial consent order. Moreover, there was no ability to renegotiate because of course by then the husband had passed away. Likewise, there must be a possibility that insolvency practitioners will have a better chance of overturning a court-approved divorce settlement on the grounds that the transaction is undervalued.

Section 11 of the 1975 Act is often forgotten by family practitioners, and this case was indeed the first reported case where Section 11 was discussed. In cases where the section 11 criteria are met, any contract within the consent order may be at risk especially when there is an application strong for reasonable financial relief by the plaintiff under the 1975 Act.

How to avoid the above risks:

1. Ideally, Sheila would have secured her position in the household upon marriage.
2. She should definitely have taken into account her position on the breakup and tried to work out the financial matters instead of delaying.
3. Perhaps the deceased should have put his affairs in order and resolved this when he gave birth to his second child, John.
4. Apparently he should have sorted things out when he remarried and was diagnosed with a terminal illness assuming of course that he knew that the will he had made earlier would be invalidated by his remarriage.

For marital practitioners, it is never the best option to include a covenant to leave at will within an order of financial consent, and in fact most of us wonder if this will ever hold—there are a number of reasons to shy away from such a ruling, but this case adds one. Else to avoid these clauses wherever possible or at least ensure that every other option is considered.

For individuals with second families, the advice should be to seek counseling at every stage of your life when there is change. Timely advice can often ensure that problems are avoided later. Changes in circumstances, whatever they may be, require a thorough study of your personal affairs during your life and also after death.

For advice on matters relating to unusual family circumstances either during your lifetime or following the death of a loved one, please contact IBB Law.

To speak to a member of our expert team about a will dispute, contact us today by calling 03301757615 Or email us at enquiries@ibblaw.co.uk.