Expert Insights

Expert Insights

What happens if one party passes away during divorce proceedings?

With the exceedingly high death rate in the fifth wave of COVID-19 in Hong Kong, people become more proactive in estate planning, such as making a Will. Indeed, what will happen if one party dies during a divorce proceeding?

If a spouse dies halfway through the divorce proceedings, the divorce proceeding will be abated. The surviving spouse will be considered as a widow or widower and may become the beneficiary of death benefits under intestacy if the deceased had not left a Will, or be left with nothing if the deceased had left a Will stating so.

According to the current intestacy laws in Hong Kong, if one dies leaving a spouse and two children, the first HK$500,000 of the deceased’s residuary estate plus all of their personal belongings will be given to the surviving spouse. Thereafter, the remaining residuary estate distribution will be given in the ratio of 50% to the surviving spouse and 25% to each of the surviving children. If the deceased dies before their spouse and their parents, the surviving spouse will be granted the first HK$1 million of the residuary estate plus all of the deceased’s personal belongings. The remaining value of the residuary estate will be distributed in the ratio of 50% to the surviving spouse and 50% to the deceased’s parents in equal shares.

Therefore, if the deceased had not left any Will, even though he or she might already be in divorce with the surviving spouse before he died, part of his or her estate will still go to the surviving spouse, regardless of the wishes of the deceased.

Things are different if the deceased spouse had left a valid Will. In that case, the deceased’s estate will be distributed according to his or her wishes as set out in the Will. He or she can leave nothing in the Will for the divorcing spouse, or even specify his intention not to leave any financial provision for the surviving spouse.

Having said that, in the event that the deceased spouse leaves no or insufficient financial provisions in the Will for the surviving spouse, he or she may make a claim under the Inheritance (Provision for Family and Dependants) Ordinance, Cap 481 (the “Ordinance”) if the deceased was domiciled or was ordinarily resident for three years in Hong Kong immediately prior to his death.

According to the Ordinance, a dependant may make an application to the Court for “reasonable financial provision” from the deceased’s estate if the Will had made none, or insufficient provision for the dependant; or if the deceased did not prepare a Will and the dependent is not entitled to share the estate under intestacy rules.

In considering what constitutes as “reasonable financial provision” for a dependant and whether the surviving spouse is a dependant in the first place, the Court will question whether it is reasonable in all circumstances for them to receive such financial provision, regardless of whether the spouse needs such provision for his/her maintenance, and he or she must prove that the deceased had been maintaining him or her prior to the deceased’s death.

If the Court accepts the spouse’s application, it will have the power to grant orders for periodical payments and lump sum orders, as well as transfer and settlement of property orders from property comprised in the estate. It is possible for the Court to transfer the entire amount of income in the net estate to the surviving spouse, if deemed necessary. In reaching this conclusion, the court will consider similar factors as per applications for financial provision in divorce, such as:

a) the financial resources and financial needs which the applicant spouse has or is likely to have in the foreseeable future;

b) the financial resources and financial needs which any other applicant has or is likely to have in the foreseeable future;

c) the financial resources and financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future;

d) any obligations and responsibilities which the deceased had towards any applicant or towards any beneficiary of the estate of the deceased;

e) the size and nature of the net estate of the deceased;

f) any physical or mental disability of any applicant for an order, or any beneficiary of the estate of the deceased;

g) any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the court may consider relevant.

It is worth noting that applicants who may issue applications pursuant to the Ordinance are not limited to surviving spouses. Family members who would otherwise be entitled to share the deceased’s estate under intestacy rules may commence proceedings. Individuals who have been maintained before the death of the deceased either wholly or substantially, such as the deceased’s parents, adult children, or siblings may also take out proceedings. Even if, for example, the deceased had an extra-marital affair, the boyfriend or girlfriend may issue proceedings as long as they can prove they were maintained by the deceased prior to their death. The Court will need to consider the needs of any other beneficiary of the estate as well, which usually makes matters much more complicated than in regular divorce proceedings.

Although there is a possibility that the surviving spouse may seek remedy under the Ordinance, and that one might wish to change their Will after the divorce is finalised, it is still advisable to have a Will done during your lifetime to ensure your wealth is passed on to people whom you wish to benefit after your death, such as your children or siblings. Whether you are in a happy relationship or going through divorce, discussing about death may seem grim. However, given the current chaos in the world, perhaps it is time to plan for the unknown.

Read Part II here: What happens if one party passes away during a divorce proceeding Part II

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