During a divorce, a couple’s attention is usually overwhelmingly focused on the process of dissolving the marriage. However, there are some related issues that require the attention of both persons, particularly when it comes to making changes in their Wills and Trust decisions and distributions. While this may be the last thing on a divorcing couples mind, it is imperative that each person reviews their current estate plan and make changes to reflect their anticipated change in status.
First, it is important for both parties to do an accounting of their individual and joint assets. For example; bank accounts, debts, mortgages and property ownership, life insurance policies, beneficiaries of superannuation accounts, executor/executrix of the estate, trusts, health care designees, and finally guardianship issues for minor children.
While many people believe that these issues cannot be addressed during the course of separation, that is not accurate. Many of your individual assets and your ownership joint interests can be redistributed. However, this can only be accomplished by drafting and signing a new Will and Testament.
In the event that you do not execute a new document, it is likely that the distribution of assets will be done in accordance with the Will you signed during the course of your marriage. Therefore, it is imperative that you review the allowances under the law for changing your distributions to a spouse from which you are currently separated.
If your divorce has been finalised, but you have not re-executed your Will some distributions and conditions will automatically be altered. These include:
- Any assets left to your ex-spouse will be disallowed and redistributed
- If you pass without a Will, your assets will be distributed in accordance with the laws of intestacy which will not allow for your ex-spouse to partake in the taking of your assets
- If you did not change your executor/executrix, the court will disallow your ex-spouse from acting in such capacity, unless you have specifically indicated your desire for them to do so
There are some things you will be allowed to change, even if your divorce is not yet final. These changes include:
- Updating your health care proxy
- Revoke Power of Attorney from your soon to be former spouse
- Remove your ex-spouse as your executor/executrix
- Decide what you will leave your former spouse because while you are separated you cannot disinherit your spouse entirely
- Any pre-nuptial agreement terms must be honoured until the divorce is finalised
- Review and amend any revocable trust documents
There are some things, that regardless of being in the state of separation or having finalised your divorce, you cannot affect. For example, while you can name a guardian(s) for your children, if in the event of your death the other parent is still living, the parent living will be given custody of the children. However, you can name a guardian in the event that your ex-spouse should pass away prior to the children turning eighteen years of age.
In addition, while you and your soon to be ex-spouse may have discussed your wishes for arrangements upon your death, it would be best not to trust this important task to someone you are separated from or no longer married. Therefore, it is highly recommended that you make your wishes known in your new Will or in a document left with someone other than your ex-spouse. This will ensure that your wishes are carried out by someone who has your best interests in mind.
Also, it is important that you do the same regarding your power of attorney and health care designee, in the event that you cannot make financial or health care decisions due to being incapacitated. While it is expected we trust our spouse with these important responsibilities and decisions, during the course of separation and the finalising of a divorce, hard feelings can develop which would endanger sound judgment and decision making. Therefore, it would be best to reassign these important duties to another family member or close friend.
If you make these changes during your time of separation, it is important to remember to revisit your decisions and your Will again, after the divorce is finalised. As expected, if you pass away during the course of being separated, any bequest you left to a spouse during the course of being separated will be distributed to them. However, once you are divorced these bequests will be revoked. If you wish for these bequests to still go to your ex-spouse you will need to state so in a new Will signed subsequent to the date of finalisation of your divorce.
After the divorce is finalised you will also have a new ability to redistribute your superannuation as a divorced person. Upon the finalising of divorce, the law does not require an ex-spouse inherit any part of the other’s estate, including retirement funds. Therefore, it is at this juncture that you may decide to leave your former spouse no part of your superannuation assets.
In all cases, once the divorce is finalised, If you decide to leave no part of your assets to your former spouse, a clear intent to do the same can reduce complications and the contesting of your Will.
If you find yourself in need of assistance with this or any other legal issue, please contact the law offices of Owen Hodge Lawyers. At Owen Hodge, we are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 770 780.