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I can understand where the confusion comes from but these are two separate issues.
The paragraph you quote in the lease relates only to the relationship between the freeholder and the leaseholders.
the Notice of Severance related only to the relationship between the two leaseholders themselves and in no way impacted on their joint relationship with the freeholder
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That is not an issue governed by the Lease.
The severance relates to how the proceeds of sale are divided - nothing else.
if the property is still in the names of the husband and wife then the sale is dealt with by the Executors of the husband with half the proceeds going to the estate of the wife .
If it had already been transferred into the joint names of the husband and the new owners then they deal with the sale