When we write a will we are usually thinking about what happens to our assets after we’re gone and, despite how often we are told to do it, it’s rare that we revisit this important document as life rolls on. But many people don’t realise that changing personal relationships can significantly impact the validity of your will and/or how your assets are dealt with when you pass.
And what with more long term marriages ending in divorce these days than in decades past, it’s worth remembering that separation or a divorce can create some unintended legal consequences.
Leaving aside strategies to build your wealth for an enjoyable retirement, there are two important life events that you should have a strategy for when it comes to succession planning and asset protection. The first life event to consider is death, and the second, while possibly less likely, but unfortunately increasingly possible, is the life event of separation.
It’s not just divorce and separation but also marriage that can affect the validity of your will and other estate planning documents.
Depending on the state or territory in which you live, a divorce order can effectively ‘strike out’ your former partner from your estate-planning documents; for example, in their appointment as your executor, your attorney or as a beneficiary. You may still want your former partner in these positions, particularly if you have children together, so you need to be clear that these arrangements should stay in place by making the appropriate change to your will.
Other changes to your relationship status do not automatically vary or revoke your estate planning documents, but there can be unintended consequences. These can include who can challenge your will or a reliance upon an outdated binding death benefit nomination in relation to your superannuation interest or life insurance policy.
Like divorce, depending on where you live, entering into a marriage can actually revoke your will too, if your will was made without taking the marriage into consideration. It can also revoke your enduring power of attorney if not made “in contemplation of marriage”.
Before deciding on how to draft your will, it’s important that you and your estate planner know how your assets are held. For example, properties owned jointly may not form part of your estate and can automatically be transferred to the other owner upon your passing. Similarly, you may not be able to control who inherits your superannuation.
This is why reviewing your will at times of relationship changes is vital. As such, here are a few of my top tips for keeping family law in mind when drafting your will:
We’ve previously written for Starts at 60 about a ‘pre-nup’ or binding financial agreement (BFA), as it is more commonly called in Australia, and why these agreements aren’t just for the rich and famous.
A BFA is effectively an insurance policy against the risk that you might separate in the future, which sets out how you want your assets to be divided in the event that you go your separate ways. It can deal with everything from property division and dependent adult children to spousal maintenance and who keeps the pets if you break up.
With divorce rates for long-term couples on the rise, it’s more important than ever to be aware of the impact that a long relationship can have on how the law treats your property in the event of separation and a good reminder that a will should also be a ‘living document’ that reflects your wishes if life changes.
IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.
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