The effect of Divorce on a Will
It goes without saying that a separation, or divorce, is not a pleasant experience, especially when children are involved.
Separating or getting a divorce? Time to make a new Will!
There are some couples who, whilst separated, are still legally married and lead individual lives. They enter into relationships and, sometimes, have children with their new partners.
However, being separated, but not divorced, does not completely separate your assets from one another from an estate law perspective, especially if you haven’t finalised a family law financial property settlement with your former spouse. If you are still legally married (but separated) to your former partner as at the date of your death, your former partner may have the right to challenge your Will, for ‘adequate provision’ out of your estate for their ‘proper maintenance and support’.
Matters are complicated further if, after your separation, you are in a de facto relationship with another person, whilst still legally married to your former spouse as at the date of your death. Your estate is suddenly faced with the prospect of being challenged by two individuals, each with legally valid competing claims. Throw in minor children, from one, or both partners and it becomes an absolute disaster, especially for the children.
Effect of Divorce in Victoria
In Victoria, a divorce revokes any gift or bequest made to the former spouse, which exists at the time of the divorce. The divorce does not revoke the entire Will. Divorce also revokes the appointment of a former spouse as an executor and trustee of a Will. This creates its own problems in relation to the operation of the Will. There is also the problem of the estate not being able to satisfy the distribution of a gift, or gifts, to other beneficiaries, as some of those intended gifts may have been used to pay out the divorcing spouse as part of the family law property settlement.
In addition to the gift not passing to the divorced spouse, that gift, if not used to pay out the property settlement, will pass to specific beneficiaries, under the laws of intestacy (dying without a Will). Such gifts may pass to children, including minor children, or, if there are no children, to the Will maker’s family members. The result may be far from what the Will maker had initially intended.
If the Will maker controls a family trust, as either a trustee, or Appointor, the operation of these roles becomes problematic. Under a Will, those roles are usually taken over by the executor and trustee of a deceased estate. As the divorced spouse no longer retains the roles of executor and trustee, succession to these roles becomes subject, again, to the laws of intestacy. This means that the next of kin (siblings, parents, uncles, aunties), under intestacy laws, may have the right to take over the management of the estate and control of the deceased’s family trust. This may not be an ideal situation. This may also create problems for the operation of a family business, usually owned by such trusts.
When should you make a new Will?
You should make a new Will upon either of the following:
- As soon as you separate. Your Will, at this stage, needs to consider the effects of a family law property settlement; or
- When you have finalised a family law property settlement, that is approved by the Family Court.
It is strongly recommended that, after finalising a property settlement with your former spouse, you should obtain a final order dissolving the marriage. This order will close the door on your former spouse from contesting your estate as the ‘married partner’ under estate law.
If you have any questions regarding estate planning or family law matter please contact Paul Traianedes, Brynne Allen or Justine Clark.