When it comes to estate planning and divorce, there are some key things you need to have on your to-do list once you have made the decision to separate.
Here’s what you need to know and plan for regarding estate planning and divorce.
Update Your Will
Many people may not be aware that after a marriage or a divorce, certain clauses in a will relating to your spouse, automatically become nullified. However, that only happens after the divorce is officially granted. Until that point, all the terms of your will remain legally binding.
It is therefore of vital importance to update your will when you actually separate and not wait until your divorce is finalised. If you were to die before your divorce is finalised, your spouse may still end up inheriting your estate, which may not be what you actually wanted. It may have even more dire consequences, if your ex is listed as your executor, as they would still be entitled to administer your estate as they wish.
As different laws apply to different states within Australia, it is best to consult with your financial advisor on the correct laws that apply to your state. Hickman Family Lawyers are well-versed in WA family law matters regarding estate planning and divorce.
Choose A New Executor
If your ex is listed as your executor that may be nullified on your divorce, leaving it up to the Court to appoint someone else to administer your estate. This may not be exactly what you had in mind when you drew up your will originally.
It is therefore important to review and choose a new executor if necessary, when you separate. Don’t forget to communicate the changes to the previous executor.
Review Your Beneficiaries
It is highly probable that you had listed your ex-spouse as a major or sole beneficiary to your estate and this will probably need to be reviewed and changed immediately too. Don’t forget to inform the insurance companies of any changes of beneficiaries as well for any life or health insurance policies you may have in place.
Update Your Power Of Attorney
If you were to become mentally or physically incapable of making any decisions regarding financial, legal or health matters, your nominated person appointed with a Power of Attorney entitles them to make them for you.
It is therefore imperative to update your Power of Attorney, delegating this vitally important function to someone you trust. Changes of Power of Attorney only become legal once the previous person has been officially informed.
Review Your Advance Health Directives
If your ex-spouse has been given Power of Guardianship, a new advance healthcare directive must be drawn up as a matter of urgency, otherwise your ex may still be able to make medical and lifestyle decisions on your behalf, should the need ever arise. This means that your ex could gain control of your financial and health related decisions.
The new Directive must be specific as to exactly who has access to your medical information and is authorised to make medical or other important decisions on your behalf.
Remove Your Ex’s Access To Your Accounts
Ensure your ex does not have access to your bank accounts, investments, policies, etc. and is not entitled to speak to any businesses, banks, etc. on any matter on your behalf. Often spouses list each other as appointed contacts on accounts such as phone and internet, mortgages and other household accounts so make sure you review any of these which are listed in your name only.
This needs to be communicated to all the relevant entities. Changing your personal passwords and pin codes of all your online accounts, such as social media, emails and bank accounts, is highly recommended.
Review Your Trust & Trustees
If you have a Trust, you will need to consider reviewing the Trustees, and to notify them if any are to be replaced.
Consider What Joint Assets Need To Be Split
The splitting of joint assets often becomes a major point of dispute in many divorces, requiring specialised financial advice to resolve.
Joint assets could include bank accounts, properties, such as the family home, vehicles, businesses, insurance policies, family gifts and inheritances and various other household belongings.
Update Your Binding Death Benefit Nomination On Your Superannuation Or SMSF
Your superannuation does not form part of your estate and is not subject to the terms of your Will. But if your ex-spouse is listed as a beneficiary on your super, and you wish to change that, it is vitally important to update your binding death benefit nomination as soon as possible. You could state the new beneficiaries or redirect all proceeds to your estate, which will then be distributed according to the terms of your will.
The same will also apply for couples sharing a Self-Managed Superannuation Fund (SMSF).
If you have questions about estate planning and divorce, get in touch with our team of highly experienced family lawyers in Perth at Hickman Family Lawyers.
We’ll explain all the ins and outs you need to know when it comes to updating your estate planning following your divorce. Book your free 15 minute phone consultation here now.
