When you are going through a separation, you need to update your estate planning documents to protect yourself, your children & family and your assets. Here are some important matters to consider after a relationship breakup.
Who Looks After Your Kids if You Cannot
- There may come a time when an unmarried, separated or divorced
parent is unable, owing to physical or mental incapacity, to take care
of his or her minor children. If a parent dies, the minor children will need
a guardian. In these circumstances, those caring for the children will need direction—as will the Courts. By writing and executing a Will that includes instructions on guardianship, a parent may select someone with the legal authority to act for minor children and assume control over the assets of the children.
- By law, your child’s other parent will generally be permitted to act as guardian of their minor children. However, your Will should include a clause that, in the event the other parent predeceases you or is unsuitable or ceases to act as guardian of your minor children, nominates a trusted family member or close friend to act as successor guardian of them.
- What is a testamentary guardian, and why do I need one for my children? A testamentary guardian is an adult nominated in a parent’s Will to care for their minor children in case both parents die before the children turn 18.
- When we have young children, we understand that if one parent dies, the other parent will automatically retain parental responsibility. But in case both parents die prematurely, each needs to nominate in their Will an alternate testamentary guardian for their minor children. Otherwise your children may end up in a home you wouldn’t choose for them, being parented in a way that’s not in accordance with your values.
- The Family Court can receive an application from any sufficiently-interested person for a parenting order to raise your children. Appointing a guardian in your Will may help avoid disputes, but the Family Court always retains an overriding power to appoint or remove a guardian when it considers this to be in your child’s best interests.
How do you find the right person to act as guardian for your kids?
- The first thing you need to do is list the qualities that most matter to you in the person who will be raising your children in your absence, such as parenting style, moral values (such as kindness and honesty), practicalities (do they have a stable home and job where you want them to live), beliefs and spiritual elements (whether you want your children raised in a particular faith).
- Is the person willing and physically able to carry out the role? For instance, are they considering having more children of their own?
- What kind of relationship does this person already have with your children? You want someone your children feel comfortable with and respect.
- Where does the person live? You may want to avoid your children having to relocate and leave their friends from their current school.
- Are they financially stable and able to make prudent decisions? How old are they? You wouldn’t want someone too old to cope with the demands of your boisterous kids.
- Don’t be tempted to rely on a DIY Will, because it is very easy to make serious mistakes with them, and any mistakes won’t become known until after you’re dead and it’s too late to fix them. The legal costs and emotional stress for your family will be far higher than if you just engaged a specialist lawyer to do it properly in the first place.
- And don’t make the mistake of assuming that your sister or best friend would automatically receive custody of your child. The Family Court decides who should become legal guardian based on the perceived best interests of your child. This may not necessarily be the person who you would choose. You should specifically name a guardian in your Will, and thus inform the Court (after your death) of this expression of confidence in that person.
- Remember that your children will be attempting to cope with the loss of both parents. A disagreement between family members who wish to take care of the child can only compound the stress and anxiety for everyone.
- You and your partner should each name the same person as the guardian of your child to avoid conflicts. It is generally best not to name both members of a couple as guardian, for fear of a further split-up of the kids in the event of the divorce of that couple.
- Deciding who will raise your child in your absence is one of the toughest decisions you’ll face as a parent.
- Once you have made your decision, you should take the time to document your hopes for raising your child in a letter and stored alongside your Will. You might want to cover issues like education, travel and the values that you think are important. Reread the letter every year or two and update it if necessary.
- You will need to update your Will and change your chosen guardian as circumstances change.
- In your Will you should setup a trust (known as a Testamentary Trust) so your children and grandchildren receive funds when they reach an age which you consider will be old enough for them to responsibly handle it (generally somewhere between 18 and 30 years old). This will preserve money for their accommodation, education, health & necessary expenses and guards against just leaving them with a lump-sum windfall to recklessly spend on fast cars or gold-diggers when they turn 18.
- You should select a trusted person, such as a close relative or friend, who will invest and hold your children’s money for them until they are old & mature enough to handle things for themselves. If divorced or unmarried, most people do not choose the other parent in this role.
- In your Will you can instruct the trustee to apply amounts of income and principal as the trustee, in his or her sole discretion, deems proper for the health, maintenance, education, welfare, or support of your children or other minors. In this way the funds are held in trust for your kids until they attain whatever age you select.
- Even if your divorce is amicable and you wish to have your ex-spouse be trustee of a trust for your children (and/or executor of your Will), you still should have new estate planning documents drafted and executed after the divorce to confirm your wishes.
About to Separate?
- If you are about to separate from your spouse or partner, but your current Will, Trust or Advance Directives still give him or her control over your assets and your medical decisions, it’s urgent that you have all of your estate planning documents re-created now.
- No matter how old you are or whether you have kids, it’s important to consult a lawyer who specialises in estate planningto make sure you have an updated estate plan for your new life once the dust has settled.
- If you are married, remember that in all Australian states the law considers you to still be legally married until your divorce becomes final, and this cannot happen until at least 12 months after separation. If anything happens to you before that divorce Decree-Absolute is issued, your estranged spouse will retain the power to make decisions over those aspects of your life, if that is what your estate planning documents permit. Remember also, that marriage will generally revoke and invalidate an earlier Will, however Divorce may not have the opposite effect. If you have separated, but haven’t gotten around to making a new Will and advance directives (such as powers of attorney), you definitely need to deal with these now.
- Even if you have a good relationship with an ex-spouse and you believe you have addressed key issues for your children as part of the divorce proceedings, you need to revisit all these issues as a single individual before you move on to the next stage.
- Even if you are very young with few assets, it makes sense to get some solid advice in this area so you’ll be able to manage such planning as you age and your finances get more complex. Particularly if you have kids, such planning is important if you plan to remarry and if you want to guarantee that specific assets are guaranteed for them when you die. Otherwise, “blended” families (with children from several relationships) can cause legal complexities and substantial heartache for your family after your death.
- Make a guardianship game plan for your kids: It’s not enough to plan how money and assets will go to your children if you or your ex-spouse die suddenly or are incapacitated. If your children are minors, it’s particularly important to make sure you and your ex-spouse have a guardianship plan for their upbringing as well as any assets they may inherit.
- Do you completely trust your ex-spouse’s new husband, wife or partner to raise your kids if your ex-spouse dies before you? It is important to establish an efficient legal structure for distributing your assets as well as appointing a trustee in a Will to train and guide your kids through that financial transition.
- Plan for special needs kids: If one of your children is disabled and is expected to need lifetime assistance of some type, then you should consult a lawyer who specialises in estate planning in Adelaideto help you create a special needs trust. It will help protect your child from having to give up any public or social financial assistance (Centrelink & Medicare) as well as access to special doctors, medical help, special prescriptions or treatments that could be taken away if they were to personally inherit assets that might otherwise disqualify them for these programs.
- When such assets are held in trust, they might not be counted as the child’s assets. The advantage is that those inherited assets may still be used to support their housing or other personal living needs.
This list contains possible items for you to consider and perhaps to discuss with your lawyer, and is not intended to be an exhaustive list. Some of these items may not be applicable in your situation.
Separation & divorce is a big life change, and it usually requires a complete overhaul of your existing estate planning documents. We have a wealth of experience in helping separated people update their estate planning documents to best protect them and their children.
If you are going through a separation and would like some assistance, call us.
SPECIAL REPORT “7 Things You Must Know
Before You Make Your Will”
In this report you will Learn:
Why home-made Wills can be a LOT more expensive than you might think.
The secret weapons used by the rich & powerful to protect their assets, and transfer their wealth two or three generations ahead.
How Estate and Trustee Companies make BIG money from “free” Wills.
The Most Common Estate Planning Mistakes, how they can cost your family a fortune, and How to Avoid Them.
The Elements of a Sound Estate Plan – why a Will alone is not enough.
How to Make Sure Your Assets Stay in Your Family and are not lost to creditors, lawsuits or ex-spouses.
How to guard against challenges to your Estate after you’re gone.