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.
- If you do not write a Will, the Government has already written one for you
– but you might not like what it says.
- When you die without a valid Will, that is called ‘intestacy’.
The law of the State where die will determine who gets what. Be careful. Not only does this law change from place to place, it also changes from time to time.
- In certain cases your assets might even go to the Government itself!
- Recent research suggests that more than 50 percent of Australians carelessly die without leaving a valid Will. In the absence of a Will or other legal arrangement to distribute property at death, problems often arise, and Courts must decide who gets the benefit of your assets. This process can be lengthy & expensive, resulting in delays in the distribution of your estate, costly Court battles between relatives, and your family highly stressed. Without a Will, your family will have to pay substantial costs for lawyers, Courts and Government fees.
- The consequences of leaving no Will can be particularly significant following a divorce or relationship separation. In the aftermath of a breakup, many persons forget to create a new estate plan to ensure that assets and decisions are taken out of the hands of the former spouse and the former spouse’s family.
- If you die before you are fully divorced (ie have not yet obtained from the Family Court of Australia the final Decree Absolute), then you are still ‘married’ as far as the law goes. If you had a valid Will while you were married and have not revoked it, then it will remain in force. This probably will benefit your soon-to-be-ex-spouse.
- If you are still ‘married’ when you die, but do not have a valid Will, then under intestacy laws your spouse will receive the majority of your assets at a minimum.
- If you get separated, and you want your assets to be inherited by your minor children, then you must create a new Will as soon as possible to protect them. This will also require you to appoint someone to hold and invest the proceeds of your estate in trust for your kids until they are old enough to look after their own affairs. This person is called a ‘Trustee’ and their job is to invest and manage the funds on behalf of your kids , and pay for their accommodation, education, health care, medical bills, clothing, etc.
Create a New Will
- Without creating a valid Will, you lose the opportunity to work with your estate-planning lawyer, accountant and financial planner to try to legitimately reduce the tax-load on your kids.
- You also lose the valuable opportunity of expressing confidence in a trusted individual to act as ‘Guardian’ to have the care & custody of your minor children. A greedy or crazy relative could ask the Court for custody. The other parent of your children may try to control the assets of your children and not properly spend the money. It probably will cause fights and lawsuits within your family. Only with proper planning and guidance from an experienced lawyer specialising in estate planning can you make sure your assets go to your loved ones or favourite charity—not your “ex.”
- Have a specialist estate planning lawyer prepare a Will to distribute your assets to the people you care about the most. If you already have a Will, the new Will revokes the old Will.
- In most Australian states, local legislation removes the ex-spouse as a beneficiary following formal divorce, it does not necessarily remove the ex-spouse as executor of the Will or prevent the ex from receiving assets under a bank account set up as a joint account.
- You also can create specific bequests so jewellery or family heirlooms go to a selected child—otherwise the executor can just sell them at the ‘estate jewellery’ (ie pawn) shop. Should you choose to do so, you can direct in your Will that a child be treated differently – ie they may have special needs, or perhaps they already have received part of their inheritance during your lifetime. If you don’t customise your Will to take these matters into account, then the standard statutory formula under intestacy may apply.
- Don’t ever settle for a cheap Will or DIY “kit’. Self-prepared documents often are not filled out correctly, are not witnessed correctly, and are not admitted to probate. Any mistakes you make with those forms (which are really just expensive stationery) won’t become apparent until after you’re gone and it’s too late to fix them. Don’t risk it – or it will be your family who will suffer the consequences. When preparing estate planning documents, turn to a specialist experienced lawyer to do it right.
- A new Will does not change the nominated beneficiaries on non-probate assets, such as superannuation and life insurance.
- Marriage separation does not have a legal effect on your Will, so the terms of your Will stay the same despite the separation, so if you have different intentions you must document them in a new Will. Most couples make Wills that give their assets to each other in the first instance. If you have a typical Will that follows this structure, and you don’t update your Will after separating, all your assets will pass to your former partner when you die. For this reason, the period of separation that occurs prior to divorce is an important time to ensure your Will reflects your changed circumstances.
- Some people are not aware they can have a new Will and other estate planning documents prepared prior to a formal divorce decree.
- If your marriage is in severe difficulty, you are able to create a new Will to protect your assets and children in the event of an unexpected, sudden death prior to the finalisation of a divorce. You can do this without telling your spouse.
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.