How a financial settlement may not always provide you with the clean break you were hoping for

29/03/2017

When your obligation to your ex-spouse extends even after you've passed: a case study on Lodin v Lodin; Estate of Dr Mohammad Masoud Lodin [2017] NSWSC 10.

The aftermath of a breakdown of any relationship can be particularly taxing. Not only are emotions running high but there are also a lot practical things that need to be taken care of, such as children's living arrangements and possibly moving out of the home.  Another thing you will also have to contemplate is the division of property. Known as a financial settlement, this is generally considered the final step in separation, with the end result being (hopefully) that both parties are able to move forward with their lives.

A recent family law case has, however, suggested that financial settlements may not signal the end of your obligation to your former spouse. Here, an ex-spouse successfully claimed $750,000 of her deceased ex-husband’s almost $5 million dollar estate despite a financial settlement being finalised around 25 years ago.

Dr Lodin, the deceased, began a relationship with Magdalena Lodin in 1984. They had a daughter, Rebecca, and co-habitated for 18 months before the relationship broke down and Dr Lodin moved out of the family home. Shortly after, Dr Lodin and Magdalena finalised a property settlement in the Family Court. Dr Lodin carried out his parental obligations by paying child support promptly and it would seem that this would be the end of the obligation of Dr Lodin to his ex-spouse.

The event that led Magdalena to being awarded a share of Dr Lodin’s estate was when Dr Lodin passed away in 2014 intestate. Under intestacy laws, his entire estate went to his daughter, Rebecca. Magdalena sought $1 million of that estate, claiming that the breakdown of the marriage had caused her significant strain and mental stress.

In finding that Magdalena was entitled to $750,000 of the deceased’s estate, the Supreme Court cited, amongst others, the fact that Magdalena had indirectly contributed to the deceased’s estate by looking after their daughter; that Magdalena was clearly in need of financial assistance presently and that Rebecca had not objected to Magdalena making the claim. The Supreme Court emphasised the unique set of facts of this case, making it unlikely that this case will open the floodgates for ex-spouses to make a claim against their former spouse’s estate.

Although it is unlikely that this finding can be used as precedent for ex-spouses to successfully claim a share of their former partner’s estate, it nevertheless indicates that a financial settlement may not be as permanent as once thought. This situation may also have been avoided had Dr Lodin executed a valid Will and outlined in it why no part of his estate was left to his ex-spouse, referring to the financial settlement finalised 25 years earlier. This may have reduced the risk of part of his estate going to an unintended recipient.

For advice about your Will, or if you would like assistance in drafting your Will, contact Townsends Business and Corporate Lawyers on (02) 8296 6222 or email our Help Desk with your inquiry.