matrimonial Archives

If you are one of the nearly 100,000 couples getting divorced every year, there will be a lot on your mind. There will be meetings with your solicitor, paperwork to prepare and sign, and you may have a property to dispose of. However, it is very important that you review both your will and your Power of Attorney. This applies equally if you are dissolving a civil partnership. Let’s look at Lasting Powers of Attorney (LPAs) and ask whether:

divorce ends your spouse’s appointment as your attorney;
divorce terminates the rest of your LPA;
before the divorce, your spouse can renounce his or her appointment as your attorney;
before the divorce, you can revoke your LPA or terminate your spouse’s appointment.

Lasting Powers of Attorney

There are two types of LPA:

A Property and Financial Affairs LPA allows you to give someone (your attorney) authority to manage your finances if you become physically or mentally incapable of managing them yourself. He or she can pay your bills, operate your bank accounts, and sell or rent your home.
A Health and Welfare LPA gives your attorney permission to make decisions about where you live, how you are looked after, and your medical treatment if you become unable to make those decisions yourself.

1.Will divorce end my spouse’s appointment as my attorney?

A divorce will usually end a spouse’s appointment as your attorney. In fact the only exception is if an LPA specifies otherwise. To consider this, let us take the example of Henry and Wilma who are married with two adult children. Henry has made an LPA appointing Wilma to be his attorney. If Henry and Wilma divorce, then the appointment of Wilma as Henry’s attorney will end on the dissolution of their marriage. The only exception is if Henry’s LPA specified that Wilma’s appointment was not to be revoked on divorce. For example, if it specifically included a clause stating ‘The dissolution of my marriage to Wilma shall not terminate her appointment as attorney of this Lasting Power of Attorney’.

2.Will divorce terminate the rest of my LPA?

The answer depends on how your attorneys were appointed.

Appointment of Attorneys

When making an LPA you can appoint just one attorney, or more than one. You can also decide whether you appoint replacement attorneys in case your original attorney dies, or is unable to act. If you appoint them ‘jointly and severally’ then they can make decisions on their own or together. If you appoint them ‘jointly’ then they must always act together and agree on every decision.

Sole attorney, no replacement attorneys

So to use the example of Henry and Wilma, if Henry appointed Wilma as his only attorney, with no replacements, then if the attorney cannot act, the LPA will end as there is no one else appointed to step in.

Sole attorney, but replacements attorneys appointed

If Henry appointed Wilma as his sole attorney and appointed the children as replacement attorneys, then the LPA would continue to be effective, but with Wilma’s appointment having terminated. Therefore, the children would be able to step in and make decisions for Henry if he became incapable.

More than one attorney appointed ‘jointly’

If Henry appointed Wilma and their children to act ‘jointly’ then because they must always act together, the LPA would be terminated on the couples’ divorce.

More than one attorney appointed ‘jointly and severally’

Had Henry appointed Wilma and his children to act ‘jointly and severally’, meaning that they could make decision on their own or together, then the LPA would not be terminated on divorce. Wilma’s appointment as an attorney would end, but the children would continue to be his attorneys. In summary, divorce will terminate your LPA, if your spouse was appointed to act alone or jointly, and there are no replacement attorneys appointed.

3.Can the attorney disclaim their appointment before the divorce?

Yes. Continuing the above example, Wilma could disclaim her appointment as an attorney under the LPA. She might want to do this if she wanted her appointment to end immediately rather than having to wait for the divorce to be finalised. She would need to complete and sign form LPA005 (Disclaimer by a proposed or acting attorney under a lasting power of attorney). The original signed form would need to be sent to Henry, and a copy to any other attorneys and replacement attorneys. If the LPA is registered with the Office of the Public Guardian (OPG) then she would also need to send it a copy of the form, together with any copies of the LPA that she has. Whether the disclaimer revokes the entire LPA or not will depend on whether Henry appointed Wilma ‘jointly’ or ‘jointly and severally’ and whether there are any replacement attorneys appointed.

4.Can I revoke my LPA or terminate my spouse’s appointment prior to divorce?

Yes. So again, using the example, Henry could decide to revoke his entire LPA and make a new one, or revoke Wilma’s appointment as attorney by signing a Deed of Revocation. He would need to give Notice of the Deed to the OPG, so it can either cancel the registered LPA, or amend its records to remove Wilma. Henry would also need to give notice to any other attorneys or replacement attorneys.

5.I have an Enduring Power of Attorney. Is the position the same?

Before 2007 you could put in a place an Enduring Power of Attorney (EPA) to appoint someone to manage your finances if you became incapable of managing them yourself. Although no new EPAs can be made, existing EPAs continue to be valid. The Enduring Powers of Attorney Act 1985 makes no provision for a situation where the donor and attorney were married when the EPA was made, but then divorce. If you have made an EPA and are now getting divorced, you may want to revoke the EPA, so the position is clear, and make a new LPA.

Alison Craggs TEP is a Senior Solicitor at The Burnside Partnership in Witney, Oxfordshire

You’re getting married! Congratulations! This is an exciting time for you and your partner. In the whirlwind of excitement, practical considerations such as a pre-nup are often far from your mind. But if you own all or part of a family business, or you expect to inherit shares in a family business, then it is important to plan for all eventualities – one of which is the possibility (however unlikely ) that your marriage or civil partnership might not last.

What happens to business assets on divorce?

The starting point for the division of assets on divorce or dissolution is an equal division, and this might include a share of the business, which could cause issues for its survival.

It is subject to the discretion of the court as to whether there should be a departure from equality. Under the Matrimonial Causes Act 1973 the court will consider a range of factors when exercising its discretion as to how assets should be divided including: each party’s financial needs and resources, length of marriage, age of the parties and standard of living.

In cases involving family businesses, there is no certainty that the business will be ‘ring-fenced’ from the division of assets. The court will consider whether the business is matrimonial property and therefore whether it forms part of the matrimonial pot.

Is a pre-nuptial agreement binding?

While a pre-nuptial agreement is not automatically legally binding in England and Wales, it will be one of the factors taken into account in the court’s discretionary approach. The decision in the case of Radmacher v Granatino [2010] UKSC 42 found that more weight can be attached to a pre-nuptial agreement provided it is freely entered into by each party, with a full appreciation of its implications.

Therefore it is likely that the court will uphold a pre-nuptial agreement if the following elements have been met:

Both parties obtained independent legal advice prior to entering into the agreement.
Both parties entered into the agreement freely without any pressure or undue influence and the agreement was executed at least 28 days before the marriage/ civil partnership.
Prior to entering into the agreement both parties provided the other with full financial disclosure.
Both parties understood the implications of the pre-nuptial agreement.
The agreement was validly executed as a deed.

When considering whether a pre-nuptial agreement is fair, the court will also consider whether there have been any unforeseen changes in the parties’ circumstances that may render the pre-nuptial agreement unfair; or whether the agreement would prejudice the needs of any children of the family. It is unlikely that the court will uphold a pre-nuptial agreement that is inherently unfair to either party or any children.

Provided that the court is satisfied that a pre-nuptial agreement follows the above criteria, it can provide protection for individuals with family businesses by ensuring the business interest remains within the family. It will provide clarity for each party at the outset of the marriage or civil partnership about which assets are intended to form part of the matrimonial finances, and allow parties to plan what will happen in the event of divorce or dissolution. It may also help to alleviate the possibility of contested financial proceedings upon the breakdown of a marriage or civil partnership, which can be a stressful and expensive process.

Seek advice

Everyone’s situation is different. Before embarking on any course of action, you should speak to a qualified advisor with expertise in issues relating to family businesses.

Do I need a prenuptial agreement?

Amanda Simmonds TEP, Senior Associate, Private Client, Lupton Fawcett, Leeds.

I’m getting divorced. Do I need to revise my Power of Attorney?