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Last will form with gavel. Decision, financial close up

Sismey v Salandron [2021] All ER (D) 25 – Exercise caution when agreeing that one party will irrevocably nominate someone to inherit under their will.

Posted on 4 February 2022

The case involved a claim under the Inheritance Act 1975, challenging, under s.11 of that Act, a covenant to leave a property by Will entered into between the deceased and his ex-wife as part of financial remedy proceedings. The deceased (D) and his ex (W1) reached an agreement in their financial proceedings, which included a covenant to leave a property by Will to the parties' son. The deceased's surviving wife (W2) commenced a relationship with the D in 2003 and they had a child in 2008, all while he remained married to W1. He told W1 that he was in a relationship with W2 in 2005, and he and W1 separated at that time. They divorced in 2013.

They reached an agreement in financial remedy proceedings, as part of which D gave an undertaking to execute a deed covenanting with W1 to leave their son (T) the property. He executed the deed, married W2 (which had the effect of revoking his Will) and died intestate.

The son (T) sought specific performance of the deed or alternatively a declaration that the property was held on trust for him. W2 argued that the estate wasn't bound, but in the event it was, asserted that the property could be clawed back under s.11 of the IHA as there had been "collusion" between D and W1 to defeat her claims.

The court found the deed to be enforceable, so considered whether it amounted to "collusion" to deprive W2 of a legitimate claim. HHJ Kelly looked at s.11, and relied on emails passing between W1 and D during their divorce. It was very clear from the emails that W1 was worried about an arrangement where the property was to be left by Will, as she was fully aware that, if D married W2 (which was clearly on the cards), then W2 might claim against the property, thus frustrating the divorce agreement. D agreed that he would do what he could to make it irrevocable. He emailed his solicitor, saying "My wife and I would like it arranged to [sic] that the house I now live in and own is left to our Thomas if anything happened to me. Is there any legal binding that can be undertaken to ensure this happens. An agreement that will stand no matter what happens in between it being signed and me turning my toes up. Such as me getting married again, my partner who lives in a house with me having some claim on it."

HHJ Kelly decided that this amounted to collusion. She then went through the terms of the consent order and decided whether there had been proper consideration for the agreement. She ultimately decided that there had been.

Antonia Felix says: Whilst the Family Court must already consider whether a clean break is possible in financial remedy proceedings, this case demonstrates just how important it is.  The Court's finding of collusion poses questions around how financial remedy consent orders should be drafted and whether a covenant to leave property by Will should be included given it can potentially be overridden by the Court when considering an application under the Inheritance Act 1975. Many divorcing couples wish to preserve wealth for their children and further and careful thought will need to be given as to how best to do this within the terms of an agreement.  It is also worth considering recording the fact that consideration has been given for an asset on the face of an Order to pre-empt future analysis of this issue by Judges in separate divisions.

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