Couples leaving all of their assets to each other in their wills can create significant legal issues if the couple divorces and they don’t each update their wills.
Divorce at any age is tough. When you’re older at the time of divorce, it’s crucial that you consider how you split your assets and the implications this will have for your estate, especially if you have adult kids or a blended family.
According to the Australian Bureau of Statistics (ABS), the median age at divorce is rising for both men and women with ABS statistics showing the median age at divorce is now 42.8 for women and 45.9 for men, compared to 38.6 and 41.4 in 2000.
If you are facing a divorce or the breakup of a de-facto relationship in later life (including same sex unions) you might wish to consider the following tips to help you prepare for the changes ahead and protect your legacy.
Revisit your will
Many couples chose to leave all of their assets to each other in their wills. This can create significant legal issues if the couple divorces and they don’t each update their wills. In most Australian jurisdictions, a divorce does not automatically revoke a will, but it does revoke any clauses that mention the ex-spouse. For example, if you have appointed your ex-spouse as an Executor or Trustee, those appointments will no longer apply, and new people will need to be appointed to those roles. Similarly, any gifts that you make to an ex-spouse in your will are also revoked and you will need to re-think who you would like to benefit from your estate and update your will accordingly. These automatic revocations may mean that the will is incomplete if it is not reviewed and updated after a divorce.
For this reason, revisiting your will is one of the first and key steps in the divorce process to ensure you pass on your assets to the people you want. A comprehensive estate planning review will also include updating the beneficiaries of assets outside your estate, such as superannuation and insurance.
A big question is whether a person should update their will before or after their divorce. There are two sides to this debate. While it’s usually a good idea to change your will before you divorce as your spouse will be entitled to your assets until your divorce is official, sometimes it’s better to wait for the official separation of assets and formal property settlement so that each party is clear on the assets that they own post-divorce. If the property settlement is taking some time, then it may be a good idea to put an interim will in place to cover the period between separation and the formal division of assets.
Once a settlement has been reached, it will be important to create or update your own will to deal with the assets that you own after the divorce and any changes to your beneficiaries as a result of the divorce.
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