Relationship Breakdown and the Importance of Reviewing Your Estate Plan
Following the breakdown of your marriage or de facto relationship, your primary focus is likely to be putting in place some arrangements for children, re-housing, dividing up your assets/finances and seeking advice from a family lawyer to assist navigate those issues. In what is already an emotional and stressful period in your life, you may overlook how a separation impacts your estate planning and what might occur in the event of your death or incapacity, particularly before a financial settlement has been finalised.
Does separation revoke a Will?
The separation of parties to a marriage will not automatically revoke a Will, Enduring Power of Attorney or superannuation/insurance beneficiary nominations. This means if you made a Will or other appointment/nomination in favour of your spouse in the early years of your marriage, it will remain valid and in effect until formally revoked by a subsequent testamentary document, or until you are divorced (to the extent it appoints or makes a disposition to a spouse). You must be separated for at least 12 months before applying to the Court for a divorce. Failing to update your estate planning could result in a situation where on your death, your estranged husband/wife could control and/or inherit all of your assets (including superannuation) and those assets may not pass to your children or other family members. Likewise, in the event of your incapacity, your spouse could still be authorised to make financial and personal/health decisions on your behalf.
For de facto couples, the law specifically provides the ending of a de facto relationship that will revoke an appointment or disposition to your former de facto partner under a Will. However, a separation will not revoke the appointment of your de facto spouse under an Enduring Power of Attorney.
It is important to note the revocation of a Will as a result of divorce or the separation of a de facto couple does not revoke the appointment of your former spouse as trustee of property left by the Will on trust for beneficiaries which include your spouse’s children or any grant of power of appointment which can be exercised by your spouse in favour of children of both of you. Therefore, if your Will also makes provision for the children of your relationship (which is likely) it should be promptly reviewed and updated.
What happens if you do not have a Will?
If you do not have a Will the laws of intestacy apply. Currently in Queensland, if a deceased is survived by one spouse and no children, then the surviving spouse is entitled to the whole of the deceased’s residuary estate. If the deceased has children, then there is provision for each of the spouses and any children and the amounts/percentages are dictated by the legislation. Pursuant to the Succession Act 1981 (Qld) a person is a “spouse” if they are a person’s husband/wife, de facto partner (and had still been living with the deceased for a continuous period of at least 2 years ending on the deceased’s death) or civil partner. As such, pending divorce, your husband/wife would still inherit from your estate.
Effect of death on jointly owned property
Following a separation, you should also review how any real property is owned with your spouse, for example as joint tenants or tenants-in-common. If property is owned as joint tenants, then upon the death of one of you, ownership will revert to the surviving owner/spouse and will not pass to the deceased spouse’s estate. Pending the finalisation of a property/financial settlement, consideration should be given to severing any joint tenancy so real property is owned as tenants in common in equal shares.
Can a settlement still be pursued in the Family Court?
You should also be aware that in the event of your death following a separation, your legal personal representative can only pursue a property/financial settlement under the Family Law Act 1975 (Cth) on behalf of your estate if Family Court proceedings were commenced prior to your death.
It is important for you to regularly review your estate planning to ensure your testamentary documents reflect your wishes and intentions and cater for any change in your personal and financial circumstances. In addition to seeking legal advice, as a part of any estate plan review, you should also consult with your accountant and/or financial planner.
If you or any of your clients have separated or are thinking of separating, then contact us for confidential family law and estate planning advice.