How Divorce Affects Your Estate Planning
There is no doubt about it — divorce is one of the most difficult life events to navigate and it can affect many aspects of your estate planning.
We explore key changes to consider in your will and provide a checklist of priority actions for your estate plan after separation or divorce.
Separation vs Divorce and Your Will
Under Australian law, separation and divorce don’t impact a will in the same way. Separation is when you stop living with your spouse or, in some cases, continue to live in the same residence but are separated.
Divorce, on the other hand, is the legal ending of the marriage. You need to be separated for at least 12 months before you can apply for a divorce.
Divorce changes your existing will
In Queensland, Divorce (Decree Absolute) revokes –
· any disposition to your former spouse;
· any appointment of your former spouse as executor, trustee, advisory trustee or guardian; and
· any power of appointment (in respect of trusts or other entities you control) in favour of your former spouse.
The rest of your will remains in force, including –
· any appointment of your former spouse as trustee of property for beneficiaries that include your former spouse’s children; and
· a power of appointment only exercisable in respect of children of both of you.
Your will is still valid during your separation
Unlike a divorce, the act of separating doesn’t change your current will. This means if you pass away before the Decree Absolute is made, your ex-spouse, if still listed as executor or beneficiary, is legally entitled to be executor and receive what you left them in the will.
Figures from the Australian Bureau of Statistics show that, on average, a couple that separates does so 8.4 years after marriage, but doesn’t legally divorce until 12.2 years after marriage. This means the average time spent separated is just under 4 years, and none of the will made during marriage is revoked during this time.
So, we recommend that you -
· update your will when you separate; and
· enter into a formal separation agreement as soon as possible. This agreement should be legally binding and clearly define your rights and responsibilities regarding property, assets, debts, child support and other responsibilities in respect of children.
What Happens if You Have No Will?
In Queensland, dying without a valid will means there is no executor and the rules of intestacy will apply to how your estate is distributed.
Where you are separated but not divorced your ex-spouse may be appointed to be administrator of your estate giving them control over distribution of your estate, and they may also be entitled to distributions from your estate.
Separation, Divorce and Estate Planning Checklist
Navigating separation and preparing for divorce can be highly stressful, emotionally and legally. Unsure about what to do next regarding your separation, divorce and estate planning? Our checklist is a great starting point to guide you through priority actions.
Review your will or make one
Updating your will after separation should be the first task on your estate planning action list. If you then divorce, review your will at that time to make sure it still reflects your current wishes.
Seek the advice of a good estate planning lawyer to amend your will.
If you don’t have a will, this is the time to make one.
Get your other legal documents in order
We will talk about the effect of separation and divorce on your Enduring Power of Attorney (EPA) document and other estate planning documents in another blog but when you get advice of a good estate planning lawyer about your will they will always discuss updating your other legal documents such as Enduring Power of Attorney (EPA), Power of Attorney or Medical Decision Maker if you don’t want your former spouse making financial and medical, future care, or end-of-life medical decisions on your behalf if you lose capacity.
Changing your EPA should also involve revoking any prior EPA and notifying your ex-spouse (and anyone else named in the revoked EPA) of the revocation.
What other things should I do on separation/divorce?
Update personal online accounts
Notify online service providers, in writing, that your former spouse is not authorised to access your records and change the passwords on all personal online accounts. Any updates to shared accounts will need to conform to legal and provider requirements.
Re-title joint assets
If assets such as properties and vehicles are in both names, re-titling ensures that the assets are clearly owned by one party and not jointly, or are owned as tenants in common not as joint tenants.
Assets owned as joint tenants automatically become the property of the other joint tenant(s) on your death. Your share of assets owned as tenants in common pass according to your will.
Verify the recipient of your superannuation FUND
You may be surprised to learn that superannuation does not form part of your estate, and is not subject to the terms of your will. To ensure your superannuation reaches the right benefactor, you may need to update your binding death benefit nomination within your super fund.
Review your life insurance policies
Update your life insurance policies to reflect your preferred beneficiary. Getting a divorce doesn’t automatically update or void your current life insurance policy. It is also advisable to review your life insurance needs and consider new policy options following the divorce.
Notify your bank of an updated power of attorney
It is essential your bank or financial institution is made aware of any changes to your Enduring Power of Attorney so your bank and investment accounts don't fall into the wrong hands.
Consider setting up a testamentary trust
A testamentary trust can provide a level of protection for a person's assets that may be vulnerable to creditors or lawsuits including protecting your property from being subject to your ex-spouse's creditors or claims in case of bankruptcy.
Testamentary trusts can also be used to manage assets for minor children, family members, or other designated beneficiaries, ensuring that they’re used for their intended purpose.
Consult with an estate planning lawyer to help you start this process by working to identify and prioritise the goals for your asset protection.
Develop a business succession plan
If you plan to continue to operate a business with your ex-spouse, consider business succession planning. Decide who will take over the operations of the business following your death or incapacity.
Review current trustees
After a separation/divorce your relationship with your trustees may have changed. Consider if you’re still comfortable to have your current trustee manage your assets and update documents if needed.
Review your assets
It is important to reassess your estate plan if your estate experiences significant changes, especially if you've gained or lost significant assets. Consult with a wills and estates lawyer to ensure your current assets are protected from future claims.
Succession lawyers are best placed to assist with your estate plan
As leading succession and estate planning lawyers on the Sunshine Coast, we understand how complicated it can be to get your estate plan in order following a separation or divorce.
We’re here to help. Get in touch with a will and estate lawyer from our team to understand more about updating your will and estate plans after separation/divorce, and to regularly review your estate planning as your life circumstances change.
You can reach us on info@bradleybray.com.au or by calling 07 5441 1400. Alternatively, get in touch online today.
This article is general in nature and does not constitute legal advice. If you require legal advice in relation to your personal circumstances, you must formally engage our firm, or another firm to provide legal advice in relation to your matter. Bradley & Bray lawyers takes no responsibility for any use of the information provided in this article.
You may also be interested in
