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Future inheritance not reason to deny wife sufficient capital to rehouse herself

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March 28, 2024

I don’t think I was aware of Mrs Justice Roberts’ decision at first instance in Alireza v Radwan & Others. If I had been without knowing the full facts of the case, I suspect that one of my eyebrows may have had cause to ascend a little. The reason for this phenomenon was the way in which Mrs Justice Roberts treated the wife’s prospective inheritance from her father as a resource that the wife was likely to have in the foreseeable future.

Inheritances, or prospective inheritances, are often a bone of contention in financial remedy cases following divorce. The general way in which they are treated is that they are not ‘matrimonial assets’, and they should not therefore fall into the ‘pot’ for division between the parties, unless they are required to cover the needs of the parties. Inheritances that were received some time before the marriage broke down may have become ‘mixed’ with matrimonial assets, so that it is no longer possible to separate them, and future inheritances are subject to the uncertainties of when, and indeed whether, they will be received (remember the principle of testamentary freedom means that testators are free to change their mind as to where their estate will go). In relation to the latter point we must bear in mind that Section 25 of the Matrimonial Causes Act 1973, which sets out the factors to which the court should have regard when deciding financial remedy claims, specifically says that the court should take into account capital and financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future.

So to the case. It concerned a wife’s application for financial remedies following the breakdown of her marriage. The parties, both of whom are dual nationals of the United Kingdom and the Kingdom of Saudi Arabia, were married in London in 1999. There are three children of the marriage, one of whom has significant learning disabilities and it is unclear to what extent he will be able to lead an independent life in adulthood. The marriage broke down and the wife issued divorce proceedings in 2013. The children remained with the wife.

When the wife’s financial remedy application went before Mrs Justice Roberts the wife had no assets of her own. The husband was found to have assets of between £14 and £17 million, most of which he had inherited from his father, who died in 1991. Mrs Justice Roberts made an order for the husband to pay to the wife a lump sum of £2 million by way of capitalised maintenance, payments of child maintenance and the children’s on-going educational costs, together with a sum for a replacement motor vehicle. She also ordered:

“…that ongoing provision for housing for the wife (and children during their minority) would be made by giving her a time-limited occupational interest in two flats in South Kensington (the larger of which was the parties’ matrimonial home and principal residence, the smaller of which was used for the housing of domestic staff and guests). The wife’s right to occupy the staff flat was to come to an end in three years’ time and in respect of the principal residence upon either the wife’s remarriage or the death of her father whichever be the sooner.”

The wife appealed against the latter order. She argued that Mrs Justice Roberts had been wrong in law to regard her future inheritance from her father as a resource that she was likely to have in the foreseeable future under Section 25, and that she should have ordered the husband to pay a lump sum to her sufficient to enable her to buy a property of her own, rather than granting her an occupational interest in the former matrimonial home.

Lady Justice King gave the leading judgment of the Court of Appeal. She confirmed that:

“…in the ordinary course of events uncertainties both as to the fact of inheritance and as to the times at which it will occur, will make it impossible to hold that an inheritance prospect is property which is “likely to be had in the foreseeable future.””

Here, the wife’s father was, at the date of the hearing, aged just 71, and actuarial tables predict that he will live for another 16+ years. How, in such circumstances, could the wife’s prospective inheritance be considered to be a resource that she was likely to have in the ‘foreseeable future’?

The answer was that this case was different from the norm. The wife’s father is a man of ‘extraordinary wealth’, and under Saudi Arabian ‘forced heirship’ laws, the wife “will undoubtedly receive a very substantial sum (measured in tens of millions of pounds) upon his death.”

Accordingly, Lady Justice King found that:

“The wife’s inheritance prospects do not have the inherent uncertainty found where a will is made in a country such as England where there is no concept of forced heirship. In my view, a prospective inheritance which has the certainty brought to it by the laws of forced heirship, is capable of being a “financial resource”” which the wife “has or is likely to have in the foreseeable future”.”

The wife’s inheritance was therefore a resource that should be taken into account. However, Lady Justice King found that the order denied the wife any recognition in the form of a capital settlement to reflect her contribution to the marriage, and that it was wrong to conclude that a wife “of 14 years with no earning capacity and three children to care for (one of whom has special needs) should be denied a capital settlement sufficient to allow her to buy a property outright in her own name.” The inheritance could be taken into account when considering the wife’s long-term needs, when the children had grown up.

Lord Justice Lewison and Lady Justice Gloster gave concurring judgments. Accordingly, the wife’s appeal was allowed, and the matter was remitted back to the High Court for reconsideration of the appropriate lump sum to be paid to the wife.

The blog team at Stowe is a group of writers based across our family law offices who share their advice on the wellbeing and emotional aspects of divorce or separation from personal experience. As well as pieces from our family law solicitors, guest contributors also regularly contribute to share their knowledge.

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