If you’ve recently been divorced, it’s highly recommended that you update your estate planning documents to ensure the protection of yourself, your children, the rest of your family and your assets. Some of the issues covered below are important considerations when you and a former partner separate.
1. Creating a new will
Assuming that your ex-spouse is an executor or beneficiary of your will, it’s advisable to revisit this important document and make a new will to protect your assets from your former partner after a divorce. In doing so, you will maintain control of what is yours and remove your ex-partner’s ability to control these aspects of your life.
It is advised that you should also review your current powers of attorney, advance care directives, trusts, proxy, delegation, etc. If you do decide to revoke these crucial legal documents, you need to communicate this decision to any of the individuals appointed within those documents.
2. Appointing a new power of attorney
Following a divorce from an ex-partner, you should appoint a new power of attorney. A power of attorney is responsibility for making decisions and signing documents on your behalf that relate to legal and financial affairs. An enduring power of attorney applies from the time that the document has been fully executed and will remain in effect until the time of your death, which of course can potentially be dangerous when that person is your former partner. Once again, it is crucial to provide a written notice to your previous power of attorney, advising them of your decision to revoke the document and that their appointment as your power of attorney is no longer in effect. Until this has been done, the current power of attorney is not considered to have been properly terminated. You should also advise your banks and other financial institutions that your power of attorney has changed.
3. Changing account passwords
Changing all of your account passwords is important to prevent your ex-spouse from accessing any of your online records. It’s also advisable to follow up by notifying the service providers in writing that your ex-spouse is no longer allowed to access any of your records.
4. Changing the beneficiary under your life insurance
Whether you have whole life insurance or term insurance, you should adjust the beneficiary under your own life insurance. If an ex-partner is required to have life insurance under a divorce arrangement to pay to you or your children, you should request proof of the policy with the beneficiary designation.
5. Storing important documents
You should consider finding a new home for important, confidential documents to ensure they are not accessible by your ex-spouse.
6. Consider the advantages of trusts and the preparing of contingency plans
It is advisable that you should speak to a lawyer about trusts, for these arrangements can protect beneficiaries in the cases of a lawsuit where there is a judgment against them.
Additionally, in the instance that you are the owner of a small business, you should consider preparing a contingency plan to ensure that someone who is not your ex-spouse will continue to run the business on your behalf if you are unable.
7. Re-titling and remaining mortgages
Assuming that what you own is in joint names with you and your ex-spouse, consider re-titling important things such as real estate, cars and other considerable assets. If there is a mortgage on any of the real estate in which you are co-named, following the separation you should decide whether it will be possible to refinance and service the loan yourself, or alternatively if it will need to be sold. Consent from the bank or finance company will be required if you make the decision to refinance.
Additionally, you should discuss with your lawyer whether it is possible to claim half of the assets in any joint account you held with an ex-partner. Have a lawyer conduct a comprehensive independent review of the titling, registration and ownership of assets in which you have an interest.
8. New advance care directive
Until you receive the final ‘Divorce Decree Absolute’, your ex-spouse will continue to be considered your ‘next of kin’ and is therefore still entitled to make medical decisions on your behalf. This decree does not actually remove your ex-spouse from being listed as the one who can make medical decisions on your behalf if you’re unable to. To do so, you need to revoke any power of attorney or guardianship documents which list your ex-spouse as the person making these decisions, and prepare a new advance care directive. You can then appoint another trusted friend or family member to take care of your medical wishes at the end of your life.
9. Binding Financial Agreements
Taking all of the above into consideration, it is advisable that you create a a Binding Financial Agreement. These documents can be created at anytime, and (for example) will ensure that your children will be the ones to inherit your assets, and not your ex-spouse.
10. Death Benefit Nominations
In the case where there is no binding death benefit nomination in place at the time of your death, the trustee of your fund will have the power to make decisions regarding who will benefit from your superannuation, considering that the decision is ‘fair and reasonable’. It is important to be aware that your superannuation fund is not considered in the terms of your will as it does not form part of your estate. This is why a death benefit nomination is crucial, because in the case that you do not have one, the trustee of your super decides who reaps the benefits of your fund after your death.
If you do have a death benefit nomination and it is your ex-spouse, it is of course advisable to create a new binding nomination after divorce. Any superannuation death benefits will be paid into your estate which will in turn be dealt with in your will. Alternatively, if you and your ex-partner share a self-managed super fund, it is even more important that your binding death benefit nomination is updated following the separation, as your ex-spouse will likely be left as the sole trustee if you were to die.
Seeking legal advice is recommended
We understand that going through a separation/divorce can be an incredibly difficult time and a serious emotional struggle for all those involved. However, while it may be hard, it is crucial that you manage these changes to ensure that your wishes are carried out in regards to your estate. We recommend speaking to a lawyer to help you through this important process.