Separation is a significant life event. It can change your living arrangements, finances and future plans very quickly. What it does not do is automatically change your Will or the other documents that decide what happens if you die.
For that reason, it is important that you review your Will and wider estate plan as soon as you separate, rather than waiting until you are divorced or until your property settlement is finished.
Why review your Will and estate plan when you separate?
After separation, your personal relationship may have ended, but your legal documents may still say something very different.
Your former partner may still be named as:
- a beneficiary of your estate;
- your executor;
- a trustee or appointor of a trust;
- a guardian or decision-maker;
- the person to receive a particular gift;
- the beneficiary of superannuation or life insurance; or
- a joint owner of property that may pass automatically outside of the Will by survivorship.
If those documents are not updated, your former partner may still receive assets or control parts of your estate if you die before you divorce, or before your estate planning has been reviewed.
This matters because divorce cannot usually be applied for until parties have been separated for at least 12 months. Many people also delay divorce while parenting, property or financial matters are being resolved. During that gap, an outdated Will can create real problems.
This is also the case if you have separated after being involved in a de facto relationship. It may take some time to finalise your property division with your former partner, but your Will should be reviewed and updated as soon as possible to ensure that it still reflects your wishes at that time.
Does separation cancel your Will?
Not it does not.
Separation by itself does not cancel your Will. It also does not remove your former partner as executor or beneficiary of your Will. That is why your Will should be reviewed and updated shortly after you separate.
For example, you may have separated, started property negotiations and no longer want your former partner to benefit from your estate. If you die before changing your Will, the old Will may still apply and your former partner my receive assets from your estate that you no longer intend for them to receive.
What changes after divorce?
Divorce can affect a Will, but it is not a complete estate planning solution.
In South Australia, divorce may revoke gifts to a former spouse and their appointment as executor, unless the Will shows a contrary intention. However, divorce does not write a new Will for you and it does not necessarily deal with every related issue.
For example, divorce may not automatically fix:
- jointly owned property;
- superannuation death benefit nominations;
- life insurance nominations;
- control of family trusts;
- company structures;
- powers of attorney;
- advance care or substitute decision-making documents;
- informal family loans or gifts;
- unresolved property settlement claims; or
- assets held outside your personal name.
The best approach is not to rely on divorce alone. You should review your estate planning at separation and then again after divorce or property settlement if your circumstances have changed.
Jointly owned property
Jointly owned property is one of the first things to check after separation.
If a property is owned as joint tenants, it may pass automatically to the surviving joint owner when one owner dies. This can happen regardless of what is detailed in your Will.
That means a separated spouse may still receive the other spouse’s interest in the property if the joint tenancy has not been severed after separation. This can be a significant issue when parties have separated but the property settlement has not yet been finalised.
A review after separation should consider whether jointly owned property should remain as joint tenants or be changed to tenants in common.
Superannuation and life insurance
The distribution of superannuation is often not controlled by the terms of your Will.
Many people assume their Will decides who receives their superannuation death benefit. Often, it does not. The trustee of the superannuation fund may decide who receives the benefit unless there is a valid binding death benefit nomination in place.
After separation, you should check:
- who is nominated to receive your superannuation;
- whether the nomination is binding or non-binding;
- whether the nomination has expired;
- whether your former partner is still nominated;
- whether your estate should be nominated instead; and
- whether the nomination is consistent with your Will.
This should be reviewed after separation and again after divorce or property settlement.
What about de facto relationships?
Similar practical issues can arise when a de facto relationship ends.
For family law property and maintenance proceedings, de facto partners generally have two years from the end of the relationship to commence proceedings if they are unable to come to an agreement regarding their property division. Unlike divorce, there may be no formal court order identifying the end date of the relationship. That makes the date of separation important.
If your former de facto partner is still named in your Will, superannuation nomination, insurance policy or financial documents, those arrangements should be reviewed as a matter of urgency.
Review again after property settlement
You should ensure that you review your Will on a regular basis and particularly after separation. You should also review your Will and estate plan again after your property settlement has been finalised.
After settlement, your financial position may look very different. You may sell the former home, refinance, receive a cash payment, transfer superannuation, divide investments or take over liabilities. Your earlier estate plan may no longer match your actual assets and obligations.
For example, your Will may gift a property that you no longer own, or it may not deal with new assets you received in settlement.
The safest course is to review your Will and related documents at each major stage: separation, divorce and property settlement.