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The Pensions Series: Beware applying for Decree Absolute where there are pensions

Over recent years I have observed an increasing number of litigants’-in-person (private individuals dealing with their own legal matters) filing for divorce. Indeed, to assist, the Court Service has amended the standard divorce petition removing legal jargon and simplifying the form and process.

If someone is minded to petition for divorce and it is not opposed by your spouse in either substance or costs, there are a number of procedural steps to overcome. Namely, the drafting of the petition and statement of case, the subsequent application for decree nisi and the application for decree absolute, the latter being the final step. If all goes to plan your will exit the process officially and legally divorced.

What most litigant’s-in-person and, from my own experience many practitioners, don’t know is that there is a potentially costly pitfall related to pension sharing lying in wait. If you have agreed (or a court has ordered) pensions to be shared on divorce the financial order will only take effect either 28 days after the making of the (financial) order or upon decree absolute, whichever is the later. Here lies the pitfall – if decree absolute is obtained before the 28th day after the making of a financial order involving a pension share and the person subject to the pension sharing order dies the pension sharing aspect will fail. The former spouse, now “officially” divorced, will also have no safety net in the form of death-in-service benefits arising from the former spouse’s pension scheme as she would have done only days or weeks beforehand while still being married.

What are the chances of that you cry? I know of one such unfortunate occurrence. The wife had petitioned her husband for divorce on the basis of his unreasonable behaviour, based in part on his persistent alcoholism. The parties had agreed financial terms which included the generous pension sharing of the husband’s pensions in favour of the wife. Sadly, the husband died (too young I might add) from a binge-drinking session one night mid-way between the making of decree absolute, which had been obtained on the client’s specific instructions, and the implementation of the pension sharing order, i.e. the 28th day. The client, despite being warned of the risks, proceeded with a laissez-faire attitude undoubtedly underpinned by thoughts of “that will never happen to me”. Only it did!

The client’s remedy for her considerable financial loss was either a special type of appeal to the courts known as a “Barder” event, a claim against her former spouse’s estate under the Inheritance (Provision for Family and Dependants) Act 1975 (although it should be remembered that pension sharing is not available in such claims), a claim in professional negligence against her lawyers if there was evidence of the same or an agreement with her children who unwittingly benefited as the pension value fell into his estate. I never did find out what happened….

If you would like advice in relation to pension sharing or any other financial matters on divorce please contact us on 01785 223440