If you are advising clients going through a separation or divorce you should be aware of the importance of reviewing a person’s Wills as soon as possible after separation.
For married parties, a divorce will revoke any gifts or appointments made in a Will to a divorced spouse but the rest of the Will remains in effect. In the most common situation an individual may have appointed their spouse as executor and their children as substitute executors and gifted their estate to their spouse and then to their children, as substitute beneficiaries.
In this case, once the spouse is divorced the Will will remain, though the appointment of the former spouse as executor and the gift to that former spouse will be disregarded and the children will be the executors and beneficiaries under the Will. While this may seem to automatically update the Will it is often the case that simply extracting key gifts and appointments can have unintended consequences that are not desirable.
As this revocation of parts of the Will relating to the former spouse ONLY occurs when the divorce has occurred, and a divorce cannot be applied for until 12 months after separation, there is a window in which the couple’s Wills probably do not reflect their current desired outcomes. A review of the Will should therefore occur as soon as possible after separation and should not be left to wait until after the divorce and property settlement process occurs.
Defacto Couples
For defacto couples, the relationship is terminated immediately on separation. However, as there is no divorce, the Will will continue unaffected. It is essential therefore that separated defacto parties revoke their existing Will immediately on separation.
Joint Tenancy Ownership of Property
Pending finalisation of property settlement, parties should consider whether it is in their interests to sever any joint tenancy they hold in property with their estranged spouse. A severance may be made without the other party’s consent and will change the way the property is held to tenants in common. A property held as a joint tenancy passes automatically to the surviving owner while a tenacy in common allows each owner to pass their share of the property to whoever they choose under their Will. This provides protection for a party, who may die before property settlement is finalised, from having the whole of their interests in that property automatically pass to the surviving joint tenant spouse.
Although, if a spouse considers the other party is more likely to predecease them before finalisation of property settlement, they may take the view that it is in their interest to leave the property as joint tenants, which would allow them the opportunity to receive the whole of the property on the death of the estranged spouse, regardless of the contents of the estranged spouse’s Will.