Sophie’s parents’ Wills were apparently straightforward. Under the terms of the Wills, everything her parents owned was left to the surviving parent and then, in the event that both her parents had died, the Wills divided their assets equally between Sophie and her brother.
When Sophie was (not so happily) married to David, David’s business needed additional finance to fund his expansion plans. To secure that finance, both David and Sophie had signed personal guarantees.
Eventually the strain of living with David and coping with his infidelities had become too much for Sophie and she and David separated. Under the terms of their Family Law settlement, their assets were divided between them, David taking sole ownership and control of the family business.
Unfortunately, because neither could offer sufficient security to persuade the bank to release Sophie from her personal guarantee, the guarantee had remained in force, subject to an indemnity from David.
With David’s energies more focussed on new relationships and with the loss of Sophie’s practical and more cautious influence, David’s business had floundered and eventually crashed shortly after the death of Sophie’s parents. With David being left without any of his assets, his business creditors turned their attention to enforcing their rights under Sophie’s personal guarantee.
The creditors obtained a Court order requiring the executors of Sophie’s parent’s estates to pay her entitlements directly to them. David’s indemnity, like any of the promises he had made to Sophie over the years, was of course worthless. Any financial support of Sophie’s children by David, was always doubtful, and is also out of the question for the foreseeable future.
Although, at first glance, the wording of the Wills might not appear to create this disastrous result, their effect was to ensure that half of Sophie’s parents’ estates passed to David’s business creditors rather than benefiting their financially struggling daughter and her children.
They call Sophie’s situation the product of “sexually transmitted debt”. Instead of Sophie receiving fifty percent of her parents’ estates, the alert creditors of David (Sophie’s ex-husband) were able to claim an unexpected windfall. One half of Sophie’s parents’ hard earned estates went to clear David’s business debts, the person Sophie’s parents had come to despise the most.