The Impacts of Separation on Estate Planning and Wills

Estate Planning Perth
November 2019 | Legal

Background

It can be an incredibly stressful time for individuals when a marriage comes to an end. But if the result is a formal separation – rather than a divorce – there may be even more turmoil ahead, in particular for future partners and dependents.

An AAG client came to us as he had separated from his wife and required our legal advice. Our client had investment interests in property, shares and a self-managed superfund, and both spouses were in the process of negotiating the terms of a property settlement order from the Family Court of WA.

After reviewing our client’s estate planning documents it was revealed that:

  1. He had executed a Will and a Non-Lapsing Binding Death Benefit Nomination for his superannuation fund monies before he separated from his ex-wife;
  2. His ex-wife was to receive the majority of his estate and all superannuation monies pursuant to the Will and the Non-Lapsing Binding Death Benefit Nomination; and
  3. The Enduring Power of Attorney and Enduring Power of Guardianship nominated his ex-wife to be his Attorney and Guardian.

As our client was discovering, while the terms ‘Separation’ and ‘Divorce’ are often interchangeably used – in the eyes of the law they are not the same. In fact, a separated couple is considered legally married, even if living under a different roof, and will continue to be viewed as such until the marriage officially ends with a Family Court divorce order. With this in mind, our client realised how critical it was that his estate planning documents be reviewed as soon as possible.

AAG in Action

Our first course of action was to advise our client that the process of negotiating a property settlement with his ex-wife was likely to take time. If his ex-wife agreed to have property settlement orders but did not agree to obtaining a divorce order from the Family Court, his current Will would remain valid. This would mean our client’s ex-wife would receive a significant portion of his estate, including superannuation monies, despite there no longer being any intention for her to receive it.

Following this, our recommendation was to review and update key legal documents to reflect our client’s changed circumstances. On his behalf we reviewed his Enduring Power of Attorney, Enduring Power of Guardianship and Non-Lapsing Binding Death Benefit Nomination for his self-managed superannuation fund. Because our client was still formally separated, and thus considered legally married, we created a new Will – ensuring that it stated it was prepared due to his separation and in contemplation of a divorce. This rendered the new Will valid, irrespective of whether or not a divorce order would be made by the Family Court in the future.

Result

Our client accepted our recommendations, and within a short space of time AAG assisted him to execute his new Will, Enduring Power of Attorney, Enduring Power of Guardianship and Non-Lapsing Binding Death Benefit Nomination. His changed family circumstances had now been properly documented and his estate planning wishes protected, providing him with great peace of mind.

Additional Information

The laws relating to the impact of marriage and divorce on a person’s estate differ between each state of Australia. In Western Australia, both marriage and divorce will render a Will invalid unless the Will was prepared in contemplation of the marriage or divorce. A separation for any length of time without a divorce order from the Family Court does not render a Will invalid.

While this is likely to be a non-issue while both parties are alive, if one were to pass away without a Will the laws relating to intestacy apply to the deceased person’s estate. Similarly, if a person dies with a Will that was executed prior to the separation, it will be deemed valid – despite the separation and neither party intending on leaving the other any assets.

AAG’s recommendation to all clients is to periodically review your estate planning documents and particularly after any significant change in your family circumstances (e.g. death, divorce, births, marriages etc.). If you believe you need assistance in this area, or have any queries, please do not hesitate to contact the AAG Legal team on (08) 9227 6300 or email

Important information and disclaimer

This publication has been prepared by AustAsia Group, including AustAsia Legal Pty Ltd (ACN 123 160 476).

AustAsia Legal Pty Ltd – Liability limited by a scheme approved under Professional Standards Legislation.

Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Accordingly, reliance should not be placed on the information contained in this document as the basis for making any financial investment, insurance or other decision. Please seek personal advice prior to acting on this information.

Information in this publication is accurate as at the date of writing, 13 November 2019. Some of the information may have been provided to us by third parties. Whilst it is believed the information is accurate and reliable, the accuracy of that information is not guaranteed in any way.

Opinions constitute our judgement at the time of issue and are subject to change. Neither the Licensee nor any member of AustAsia Group, nor their employees or directors give any warranty of accuracy, nor accept any responsibility, for any errors or omissions in this document.

Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.

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