The Importance of Estate Planning Following Separation

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The Importance of Estate Planning Following Separation

When a couple decides to separate there are usually a lot of things to attend to at what is a very trying time. Working out where to live, how childcare arrangements will work, and what steps need to be taken to ‘uncouple’ other areas of your life are all time-consuming priorities to sort out.

One of the key priorities a couple who separate should attend to after the break-up is the terms of their estate plans. This can mean updating wills, powers of attorney, superannuation beneficiaries, life insurance policies and even advanced care plans, to reflect their new circumstances.

The reason for this is that failure to do so potentially leaves your ex-partner in a position to inherit and/or influence all – or a large portion of – your estate should you unexpectedly die before updating these documents. This can be the case even where there is no will in place, as until there is an effective divorce order intestacy rules will favour your ex-partner in terms of your estate.

Which specific issues do I need to address?

Lots of couple make reciprocal wills and appoint the same power of attorney (such as an adult child) during their relationship. These are not revoked after separation so will need to be reviewed after the break-up and amended if you do not wish your ex-spouse to inherit your estate in the event of your death or making decisions for you if you become incapable. This can be the case even if there was an agreement on a property settlement but there has been no divorce and no updated will.

First priority, therefore, is preparing a new will which appoints someone other than your ex-spouse as the executor of your will and beneficiary.

In Queensland, it should be noted, if you divorce after separation, then a power of attorney in favour of your ex-spouse is rendered invalid. But in any event, if your estranged spouse is already appointed as your power of attorney, you should revoke these documents after separation otherwise they can make important financial decisions on your behalf should you lose the capacity to manage these affairs yourself.

The same applies if your ex is appointed as your enduring power of attorney, that is, the person empowered to make decisions about your medical care and treatment in the event that you lose the capacity to do so yourself, including life support options. Failure to do so leaves a lot of power and influence in the hands of someone who you may no longer trust to act responsibly when it comes to these matters.

The role of divorce

While this article deals with the priorities you need to address after separation, one of those priorities should also be the need to finalise a property settlement and the divorce.

It is important to divide up property by way of a property settlement, particularly if there are jointly owned assets, so as to clarify inheritance for any potential beneficiaries such as children from the relationship. Experienced estate planners will advise you to have documentation prepared and registered after separation to change the way in which the ownership of real estate is held from that of joint tenants to tenants in common. This does not need the signature of the estranged spouse and will prevent them from automatically receiving the whole of the real estate if you die before a property settlement is reached.

It is important that you understand that your estate cannot pursue a division of property against your ex unless an application has already been filed in the court before you die. You do not have to wait until you are divorced to do a property settlement or if you cannot agree, you can file an application in the court without having to seek a divorce.

If there is no chance of reconciliation between you and your spouse, then after 12 months of separation you should apply for divorce so as to finalise the changes reflected in your updated estate plan and end any further claims by your ex on your estate.

To conclude, if you separate from your spouse, you need to make a comprehensive review of your estate plan which encompasses the points outlined above. Doing this will be much easier if you consult legal professionals such as South Geldard Lawyers of Rockhampton with widespread experience in estate planning, wills and family law particularly in the situation of newly separated couples.

Contact us today on (07) 4936 9100 if you have any questions or concerns about estate planning and family law.

It is important to seek specific advice regarding your circumstances as this fact sheet provides general information only and does not constitute legal advice.

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