Ruling may affect financial entitlements of ex-spouses

 

THE HIGH Court has delivered a judgment that is likely to change the way in which separated and divorced spouses are provided for following the death of either party.

A judgment delivered recently by Mr Justice Michael Peart means it will no longer be routine for a court to issue a “blocking order” preventing an application to be made for financial provision out of the estate of the deceased spouse.

Under the Succession Act, a spouse has an automatic entitlement to a minimum fixed percentage of the estate of the other spouse, the percentage depending on whether the spouse died testate or intestate and whether or not there are children. Following a divorce or a judicial separation, the spouse no longer has an automatic right to such a percentage.

In many judicial separation and divorce cases, some provision is made for continuing maintenance of a dependent spouse, either through the payment of a lump sum when the divorce or separation is finalised, through the setting-up of a life insurance scheme to provide for continuing maintenance, or through a pension adjustment order which provides for a portion of the earner’s pension to be paid to the dependent spouse. But this only happens where the resources exist for such arrangements to be made.

Though the Divorce Act provides for an application to be made for provision out of the estate, the practice has grown up that in almost all divorce and judicial separation cases the court makes a “blocking order” under section 18 (10) of the Act, which has the effect that neither spouse can make an application for provision out of the estate of their former spouse. This means that where such a blocking order is made, a spouse receiving maintenance no longer receives it unless some alternative guarantee of payment has been put in place.

The case that came before the High Court recently involved a couple who were legally separated and the man later sought a divorce in the Circuit Court. The court made the divorce decree, giving the wife a lump sum of €50,000 and €200 a week in maintenance. The Circuit Court judge also made a blocking order that neither could apply for provision out of the estate of the other. The couple’s children were grown up.

The husband runs a small and successful business. The court was told the wife previously worked in the business and later worked as a carer with the Health Service Executive, but her hours had been cut back and her financial position had therefore deteriorated. She was very concerned about her security in the event of her husband’s death and sought some modification of the blocking order so that she could make a claim against her husband’s estate if he died.

“It is reasonable for the wife to have fears around what is to happen to her in the event of the applicant’s death, whenever that should occur,” Mr Justice Peart said. If the husband’s employment carried some sort of pension plan, a Pension Adjustment Order could be made, but there was none.

He ordered the husband to give a month’s notice to the wife of any intention to retire, sell or otherwise dispose of his business, so that she could take legal advice about how to secure maintenance.

Turning to the issue of the blocking order, he said: “It seems appropriate that the court should not make a blocking order under section 18 (10) of the Act of 1996 unless the court can be satisfied that proper provision has been made for her maintenance after her husband’s death.”

This would allow her to make an application for provision out of his estate, if her circumstances justified it. It would be a matter for the judge hearing the application to consider the case history, he said.

Details of the judgment, delivered on August 13th, have only just emerged because the case was heard in camera.

Decisions of the High Court are binding on the Circuit and District courts, so it is likely that this judgment will be taken into account in future divorce and judicial separation cases, where no provision has been made for the protection of maintenance payments following a spouse’s death.