The case of Goodyear v Goodyear (Deceased) concerned the application by the husband to set aside a pension sharing order (PSO) following the death of his ex-wife. The husband’s pension was in payment but the PSO had not been implemented at the time of the wife’s death, 6 months after the PSO had been agreed. The application was opposed by the executors of the wife’s estate, who were the couple’s two adult children.
The key issue was whether the death of the wife had invalidated the basis or fundamental assumption upon which the PSO had been made. The Judge stated that it was important to establish ‘…the intention of the parties at the time that the order was approved…rather than any intention that was formulated thereafter’.
The Court considered that if it had been known that the wife would die within 6 months of the PSO being agreed, then steps could have been taken to ensure that the external transfer of her share happened as quickly as possible to enable her to convert the pension credit to a capital sum. He was satisfied it would not have been considered fair for no PSO to have been made as the husband’s pension amounted to more than half of the couple’s entire capital worth. However, he also noted that the husband’s income needs would be continuing, whereas the wife’s would not, and he considered this sufficient justification to depart from equal shares. If it had been known at the time the PSO was agreed that the wife would live only a further 6 months, a significant reduction in the percentage share would have been appropriate as that share of the pension required for her income would never be utilised. He considered the correct level of pension share to order was 25 per cent to the wife’s estate, representing the “discount” for the many years for which the wife would not require income.
This is a decision for trustees to note. Where there is a lapse of several months between a PSO being agreed and implemented, they may wish to check that none of the key facts on which it was based have changed in the interim.
