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Are you separated – Impact of Separation on your Will and Estate Planning

Oct 20

3 min read

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Overview

A formal separation between married couples or de-facto partners is emotionally burdensome for both spouses or partners and their respective extended families. This may lead to other significant matters being overlooked. This article aims to provide a simplified overview of the impact separation and divorce may have on your Will and estate planning documents in Western Australia, and the need to seek anticipatory legal advice in that regard.


Scenario

My client recently separated from his wife. The client has investment interests in real property, shares and a self-managed superannuation fund. Both spouses were in the process of negotiating the terms of a property settlement order from the Family Court WA.


My primary objective was to review my client’s estate planning documents and provide him with advice as to what steps he must undertake with respect to his estate to address the recent changes in his family circumstances.


The client’s estate planning documents revealed that:


  1. he had executed a Will and a non-lapsing binding death benefit nomination for his self-managed superannuation fund a few years ago before he separated from his ex-wife;

  2. his ex-wife was to get a lion’s share of his estate and all the superannuation monies pursuant to the current Will and the non-lapsing binding death benefit nomination;

  3. the enduring power of attorney and enduring power of guardianship nominated his ex-wife to be his attorney and guardian.


Separation and Divorce- The Differences

Separation and divorce are two terms that are sometimes used interchangeably when referring to the break-up of a marriage, but they do not have the same legal definition.

A separation is when you and your spouse or de-facto partner stop living together as a couple or partners. However, this does not mean that one of you has to move out – you can still be deemed separated whilst still living under the same roof. Importantly, you are still legally married when you are separated, until you officially end your marriage by seeking a divorce order from the Family Court. Divorce orders are granted by the Family Court only in the case of married couples, but not in case of de-facto partners.

Many couples separate and never obtain a divorce order or a property settlement order from the Family Court.


Legal Ramifications on Wills and Estates Planning

The laws relating to the impact of marriage and divorce on a person’s estate differ from State to State. In Western Australia, both marriage or divorce render your current Will invalid unless the Will was prepared in contemplation of the marriage or divorce.

 A separation for any length of time from your spouse without a divorce order from the Family Court does not automatically render your current Will invalid.


 This does not present many problems whilst both spouses are alive, but if one of them passes away without a Will the laws relating to intestacy apply to the deceased person’s estate. Similarly, if a person dies leaving a Will, which was executed prior to the separation, such a Will is valid despite them being separated for a long time with no intention of leaving each other their assets.


In case of a separated de-facto partner, the current Will remains valid despite separation, unless he or she executes a new Will post separation.

I advised my client that the process of negotiating a property settlement with his ex-wife may take significant time. If his ex-wife agrees to have property settlement orders, but does not agree to obtaining a divorce order from the Family Court WA, his current Will remains valid and his ex-wife will receive a significant portion of his estate and the superannuation monies despite he not having any intentions to leave any assets for her.


Recommendations

I recommended the client to review his Will, enduring power of attorney, enduring power of guardianship and a non-lapsing binding death benefit nomination for his self-managed superannuation fund to reflect the changed family circumstances. The new Will must state that it has been prepared due to his separation from ex-wife and in contemplation of a divorce rendering it valid irrespective of whether or not a divorce order is made by the Family Court in the future.


My client accepted these recommendations and executed his new Will, Enduring Power of Attorney (EPA), Enduring Power of Guardianship (EPG) and a non-lapsing binding death benefit nomination to reflect his changed family circumstances.


Takeaway Message

I strongly recommend periodic legal review of your estate planning documents (i.e. Wills, Powers of Attorney, Powers of Guardianship and death benefit nominations for superannuation monies) after any significant change in your family circumstances (e.g. death, divorce, births, marriages etc.). This will minimize legal costs and mental agony for all involved parties after separation, divorce or death as the case may be.

Oct 20

3 min read

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