Logo
Helpful Resources
  • Close

Request a Consultation

The Pay Rise Negotiation Cheat Sheet for Young Australians

Do you want to make more money? Many companies offer a once-a-year, across-the-board pay rise that helps earnings to keep up with inflation. But if you’re seeking more, you’ll need to negotiate. And for many of us, negotiating is intimidating. But fortunately,.....

Estate Planning - 7 min read

Divorce affects more than just your relationship status. It’s a permanent legal action that impacts Wills, trusts and other estate planning tools.

It’s important to review your Will and estate plans after any significant life event, such as marriage, the birth of a child, and separation or divorce. In this article, we’ll look specifically at how divorce affects your estate planning.

 

Wills

If you have a legal Will in Australia before you get married, it will be nullified when you marry. This fact surprises many people. If you fail to create a new Will upon your marriage, your spouse will likely inherit a large portion of your estate. This isn’t a problem for people who marry for the first time, but if you have children from a previous marriage, you must take control of your estate.

When it comes to divorce, keep the following issues in mind.

 

The Legal Distinction Between Separation and Divorce

Many couples separate for a time before they officially divorce, but they may not realise that marriage separation doesn’t affect a Will like divorce does. If you neglect to update your Will upon separation and you pass away, your spouse may inherit the property designated initially to him or her in your Will. In the same vein, if your spouse is listed as your executor, he or she will still be legally obligated to perform that role, even if you pass away while you’re separated.

 

State and Territorial Differences

Not every Australian jurisdiction treats divorce the same way when it comes to Wills. In some areas, divorce automatically renders Wills invalid, but in others, divorce revokes your former spouse as executor and disregards any gift left to them. Check with your local laws and financial adviser to learn more about your state or territory.

 

Power of Attorney

Although divorce revokes your Will, it doesn’t affect an Enduring Power of Attorney (EPA). Since an EPA allows the named attorney to make financial decisions for you, it’s crucial that you also revoke the document if you no longer want your former spouse to make these decisions for you.

 

New Call-to-action

 

Your Estate Planning To-Do List

Whether you have an in-depth estate plan or just a super with your employer, it’s essential to pay attention to a few key details when you go through a divorce. You’ll need to make sure you meet your legal obligations to your ex-spouse, but you always need to provide for your future.

To do so, make sure you undertake the following tasks.

 

1 - Update your Will. If you revoke some of the designations included in your previous Will, you’ll need to communicate revocation documents to the individuals previously appointed.

 

2 - Prepare new materials as soon as you are separated if you don’t want your spouse to make financial or medical decisions for you.

 

3 - Change passwords for your online accounts and notify service providers that your former spouse is no longer permitted to access your records.

 

4 - Change your beneficiaries on your life insurance. Some people assume that the legal wording on their divorce documents will take care of details like insurance beneficiaries. Don’t count on it. Be as explicit as possible in your legal wishes.

 

5 - Prepare a power of attorney to choose someone to manage your finances if you become disabled. Notify your bank if a previous power of attorney is being replaced or invalidated.

 

6 - Discuss with your solicitor and financial adviser the advantages of creating a trust for your estate planning. Trusts protect beneficiaries from lawsuit challenges, which can be common in cases of divorce.

 

7 - Consider whether trustees are still ideal, given the changing family dynamics. If you decide to change trustees, file the necessary paperwork.

 

8 - Consider re-titling joint assets such as cars and properties.

 

9 - Review your advance care directive and determine whether or not you need to make amendments.

 

10 - If you own a small business and your spouse has been involved in its operations, prepare a contingency plan for someone else to take control if you become incapacitated.

 

11 - Have a solicitor or financial adviser review a list of your assets and determine whether any changes need to be made to protect what’s yours.

 

12 - Review the death benefit nomination on your superannuation account. Keep in mind that your superannuation does not form a part of your estate. Therefore, it’s not subject to the terms of your Will.

 

13 - Update your binding death benefit nomination if you and your spouse shared an SMSF. If you die, your partner is likely to be designated the sole trustee of the fund and can make all decisions about the payout.

 

The list may seem overwhelming, but we can help you along each step of the way. Additionally, we can help you review your estate plan and make any changes that will help you to reach your new goals.

Reach out to us at Altus to set up a consultation or learn more about how divorce impacts your Will and estate plan.

 

New call-to-action

Could Your Business Benefit from an Outsourced CFO?

Set your business on the right path with this simple guide.

Could Your Business Benefit From an Outsources CFO_Resources

Prospective Business Owner - Succession Checklist

Make sure you’re on the right track with this online checklist.

Business Owner - Succession Checklist_Resources
Have a question for Adam Montana?

Connect with the author of this post and they'll get back to you.

close (1)