Separation from a partner or spouse can be a very stressful time for everyone involved. A plethora of issues must be considered, ranging from property settlement to child support and all in between. One aspect of this process that should never be overlooked is the evaluation and update of your estate plan. It is possible that your former partner or spouse will inherit your estate and assets if you haven’t amended your will after a divorce or legal separation.
Thinking about separation or divorce?
If you have a Will, it is important to review it.
The practice of spouses making Wills that state that everything they own passes to the other in the case of their death is fairly popular in Australia. When people are in a relationship or married, it is common for them to have this goal in mind. Even if you divorce or separate from your married spouse, it is important to remember that your Will, as it pertains to your spouse or partner, will continue to be in effect until such time as you are divorced and the Court issues a Divorce Order or until such time as you change or revoke your Will, whichever comes first. After a divorce, many people continue to be legally married for a period of time, often years. If your Will is not modified before you die, your estate may not be distributed to the people you intended.
If, on the other hand, you are in a de facto relationship, any provision made in your Will for your de facto spouse will be null and void as soon as the relationship comes to an end. In a similar vein, if your ex has been named as the executor of your Will, this appointment will be terminated as soon as the relationship ends. The evidence available to prove whether or not the connection has ended and the proof indicating the relationship has ended may, however, differ from one another in this respect, and there may be some ambiguity in this regard.
If you do not make a Will and you are still married or in a de facto relationship, your husband or partner will still be entitled to a portion of your inheritance under the intestacy provisions of the Succession Act 1981, even if you do not have children. If you have children, the part of your inheritance that they receive will be proportional to the amount of your estate that they receive. Again, if you are married, this entitlement will continue until such time as you have secured a Divorce Order or have executed a new Will that specifically excludes your spouse from inheriting from your Estate (whichever comes first).
Need some information that relates to your circumstance?
What happens if I am separated from my spouse but not yet legally divorced?
Separation alone will not invalidate a will in the case of married couples. Australian law requires that married couples have been separated for a minimum of twelve (12) months before submitting an application for a divorce. If you have an old, out-of-date will in place that bequeaths everything to your former spouse during the period of separation (which can be many years), he or she will receive exactly what you have bequeathed to them.
For example, if we slightly alter the circumstances so that Jill unexpectedly passed away in December 2012 (while she was separated from Jack but not yet divorced), her existing 2000 will (in its entirety) will remain valid, and Jack will be the sole executor and beneficiary of her estate, as in the previous example.
Joint Tenancy and Ownership of Real Estate
Parties should examine whether it is in their best interests to sever any joint tenancies they may have in real estate with their estranged spouse while the property settlement is being finalised before proceeding. A severance can be completed without the approval of the other party and will result in a change in the manner the property is held by tenants in common. An estate that is held in joint tenancy automatically goes to the surviving owner, while an estate that is held in tenacy in common allows each individual owner to leave their portion of the estate to whoever they wish under their Will. This protects a party who may pass away before a property settlement is completed from having the entirety of their rights in the property automatically transferred to the surviving joint tenant spouse upon their death.
The fact that one spouse believes their spouse is more likely to die before the property settlement is finalised may lead them to believe it is in their best interests to leave the property as joint tenants, which would give them the opportunity to receive the entire property upon the death of their estranged spouse, regardless of what is written in the estranged spouse’s Will.
Various State Legislation Distinctions
In several Australian jurisdictions, in the event of a divorce, the Wills of both couples are declared invalid by the court. However, in some cases, a divorce results in the ex-spouse being removed from the position of executor of the will, and any gift or portion of the estate to which they were originally entitled is disregarded as well.
It is necessary for you to take the proper activities based on which state’s legislation is applicable in your situation.
Nominations for Death Benefits in Superannuation are legally binding.
In relation to your superannuation, it is crucial to be aware that Death Benefits from superannuation funds do not, under Australian law, become part of your estate and are instead dispersed in accordance with your Will.
It is instead up to the discretion of the Trustee of your superannuation fund to select who should receive the benefit from among a class of prospective financial dependants of the deceased member to determine who should receive a benefit from the fund.
Any designation of preferred beneficiaries will not be binding on the Trustee unless the Fund authorises the making of a Binding Death Benefit Nomination and you have completed such a document in line with applicable legal requirements, in which case it will be binding.
When you separate from your spouse, it is critical that you revoke any binding death benefit nominations made in his or her name and replace them with a new document that names your intended beneficiary or beneficiaries.
If you have not yet completed a Binding Death Benefit Nomination with your superannuation fund, you should consider doing so because, in most cases, death benefits will be paid from a superannuation fund in the way set by the Fund Trustee. Because otherwise, the Trustee will most likely distribute your Death Benefit to your spouse, child or children, and/or your estate in the proportions determined by the Trustee, this is a requirement if the Fund offers binding nominations, but it is also a requirement for non-binding nominations, as described above.
Need some information that relates to superannuation?
What Should You Do Now?
At Mediations Australia, we have a team of family lawyers and mediators who can assist you in Canberra, Perth, Adelaide, Melbourne and all other locations in Australia. We also do international family law matters. Call us today.