A little bit of background.
ND and GD had been married for over twenty years, with two grown-up children both studying at University.
Throughout their relationship, the pair had enjoyed a ‘relatively modest’ lifestyle. Even after the husband inherited a large property portfolio, the couple continued to keep expenses relatively low, with the wife described as ‘frugal’ in nature.
Sadly, just months after the couple decided to separate, the wife was diagnosed with Young Onset Alzheimer’s, a neurodegenerative condition that reduced her life expectancy to between just 5 and 10 years. Within two years of her diagnosis, she had been declared unfit for work, reliant on state funding as a primary source of income.
The variables vying for attention
- An impressive property portfolio.
Five years prior to separation, the husband became the sole benefactor of his late mother’s estate, which included a number of residential properties across the UK. The estimated worth of this, once Inheritance Tax and Capital Gains Tax (this is a tax on the profit you make when you sell an asset) had been accounted for, totalled £2.6 million.
In contrast, the matrimonial assets accrued totalled a slightly smaller £750,000 – which included pensions, investments and equity from the family home.
Taking centre stage during this case was a consideration of the wife’s health and care needs. Lengthy discussions ensued in an attempt to determine what housing and income funds would be appropriate in light of her life-changing diagnosis.
To assist in answering these questions, a Single Joint Expert (SJE) Consultant Old Age Psychiatrist and SJE Occupational Therapist were instructed on the case. In tandem, they emphasised the importance of the wife remaining at home for as long as it remained feasible. A care home setting was determined to be unsuitable, with her local community providing essential stimulus and a structured routine.
However, it was noted that the wife’s current residence was inadequate for her longer term health needs and a single-storey, three-bedroom property was championed as the most suitable alternative – which would, of course, come at a notable cost to the parties involved.
Estimates were also made by the SJE Occupational Therapist in reference to the cost of care, totalling between £65,000 and £69,000 for ‘live-in’ and residential care respectively.
The premature and degenerative diagnosis meant that the wife’s needs were quickly outstripping the matrimonial assets the pair had accrued together. This was summed up aptly within the Court report, which stated that the wife’s ‘needs claim comfortably exceeds her sharing claim’.
The Court also looked to the length of marriage (which was in excess of 20 years), as well as the needs of the couple’s two children, who had expressed their wish to continue residing with their mother during University holidays.
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The Court had to consider these conflicting factors carefully, balancing the health and welfare needs of the wife (which were anticipated to become more demanding over time), with the knowledge of the husband’s substantial inheritance.
What could be deemed a fair outcome for both parties?
The decision.
The expert evidence provided by the SJE Occupational Therapist and Consultant Old Age Psychiatrist had a notable impact on the settlement. The Judge ‘invaded’ the non-marital assets, awarding the wife a total of £953,101. Of this sum, £650,000 was dedicated to her housing needs, with the remaining £300,000+ contributing towards her increasing care needs.
This sum was thought to be an ‘equitable balance’ between the wife’s changing health and welfare circumstances, the long marriage and the ‘origins of wealth’ in relation to the husband (who was afforded just over £1.6 million).
The Judge opted for a clean break order, which means that neither party can make a future financial claim in respect of the others income and assets.
The reasons were twofold. Firstly, the Court had become aware of tension between the two parties, which many thought would be aggravated if a clear end to the proceedings was not provided.
It was also deemed that ongoing financial and legal links would place the wife under stress, from which the Judge deemed she may not be able to cope.
Our analysis.
Laura:
There are a number of key issues here that could have been avoided or mitigated if the husband’s late mother had reviewed the plans for her estate prior to her death. We do not know if she had taken advice and decided against it, but there may have been a different outcome for her son if she had done so.
For example, if the mother had considered what she wanted long term for her estate after she had gone, she may have considered placing the property portfolio in a trust, not only to potentially benefit her son, but also her grandchildren (and any future children they may have), thereby preserving her estate through her bloodline. This could have also proved more beneficial from an Inheritance Tax perspective, rather than each of their estates potentially being taxed a sizeable amount each time one of her descendants passes away.
The husband’s mother could have also considered some lifetime giving to reduce the value of her estate before she passed away, thereby potentially reducing the amount of tax payable on her own estate.
Long term, this would have also benefited the husband’s two children, as they would have been considered as potential beneficiaries of the trust. This may have also reduced the level with which the Judge ‘invaded’ the non-marital assets, as he would have needed to consider the potential interests of the children alongside the immediate health and welfare needs of the mother. Having said that, it may very well be the case that the husband’s mother would not have wanted to see her daughter-in-law (even ex daughter-in-law) unable to afford accommodation which would have suited her needs; tax is not the only consideration to be taken into account when putting your affairs in order.
If you are in possession of multiple properties or large savings and investments, then it is vital that you speak to a solicitor to obtain advice about the best way to benefit those you love.
Also, from a practical point of view, it’s worth highlighting the vital role that the wife’s ‘litigation friend’ played throughout this process. With a valid Lasting Power of Attorney for finances and property in place, a trusted individual was able to oversee the negotiations, reducing the physical and emotional burden on the wife.
Kate:
This case provides is an important authority for Matrimonial Practitioners.  Within the Proceedings the Court had to consider important conflicting factors, namely the Wife’s special health needs and requirements and the Husband’s significant non-matrimonial assets. Both of these issues were perhaps of equal importance however careful consideration had to be given, by the Court, to both. It is clear that the Court turned to the principle of fairness and the precise needs of the parties in order to achieve the appropriate outcome.
A central aspect of the case was the Wife’s diagnosis of Young Onset Alzheimers and how this would impact upon her needs.  Her condition meant she was a vulnerable party and she was assisted by her Litigation Friend throughout the proceedings.  As a consequence of the complexity of her illness and the impact of her condition on her ability to provide direct evidence, Expert evidence was necessary and was crucial in order for the Court to be properly informed in relation to how the Wife’s needs could be properly met. As a consequence, Single Joint Experts were instructed, namely an Occupational Therapist, a Consultant Old Age Psychiatrist and a Financial Advisor were instructed.
These Proceedings also had to be approached delicately. One of the key issues was the life expectancy of the Wife which had to be determined in order to establish the Wife’s needs in terms of housing an income and what funds she would require in order to meet those needs. It was determined with the assistance of the evidence of the Psychiatrist that the Wife’s life expectancy was in the region of ten years.
The Occupational Therapist was also of considerable assistance providing a detailed assessment and written report of the costs of providing suitable care for the Wife. The Financial Advisor provided detailed and essential evidence and information to the Court in connection with capitalisation of funds, factoring in the Wife’s anticipated income and care costs over a range of different life expectancies.
The outcome of the Proceedings was clear in that Wife’s complex health requirements and significant and specific needs outweighed the usual arguments in relation to the standard of living and appropriateness of housing. As a consequence, the inheritance of the Husband was considered to be a matrimonial asset for the purpose of meeting the Wife’s needs, even though the capital and income from the inheritance had not been utilised for matrimonial purposes.
The Case also highlights the potential impact that tailored and specific expert evidence can have on the outcome where the needs of one party are demonstrated to be so specific and crucial to the overall resolution of the case in order to achieve fairness.
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