Updating Your Estate Plan

Something people don’t always think about when going through a separation is updating their estate plan. An estate plan involves the arrangements for how you want to be looked after if something happens to you. Relevant arrangements include:

• appointing Powers of Attorney;
• appointing Enduring Guardianship;
• updating your Will; and
• updating the executor of a Will.

Your plans are likely going to going to change quite significantly after separation. It is therefore important to update your estate plan to give you peace of mind.

Why you need a new estate plan:

1. If you don’t have a Will, the Government will determine what will happen to your estate when you pass away. This is referred to as dying ‘intestate’. By preparing or updating your estate plan after separation, you have the power to determine who will receive your assets when you pass away and who will be in charge of managing your affairs if you lose capacity.
2. If you die in intestate, there are rules as to who will receive your estate. Your current spouse will be entitled to the whole estate. If you are separated by not yet divorced, it is possible that your ex-partner will still qualify as your spouse and may receive your estate.
3. If your divorce has finalised, your Will and power of attorney documents may have been automatically revoked. It is therefore important to update your estate plan is accordance with your wishes as you may be left without an estate plan.
4. Your superannuation benefit will not automatically form part of your Will. It is important that you update your superannuation nominations as well as any reversionary pension to make sure your ex-partner does not receive all your superannuation and life insurance.
5. If you have children under 18 years of age and you decide to leave them money in your Will, you can determine who will manage the money on their behalf until they are able to access the funds. You may wish to nominate a family member or a friend to manage your children’s inheritance, rather than your ex-partner.
6. What happens if you lose capacity? If you are separated but not divorced, your ex-partner may be able to make major medical decisions on your behalf. If you appoint an Enduring Guardian after you have separated, you will be able to determine who you would like to legally appoint to make decisions about your health and lifestyle in the event you cannot make these decisions for yourself.
7. A Power of Attorney gives a person that you appoint the power to make financial and legal decisions on your behalf when you are not able to, for example, pay bills, buy and sell real estate, open and operate bank accounts. A Power of Attorney ceases to operate if you lose mental capacity, however an Enduring Power of Attorney will still have effect even if you lose capacity. If you have an Enduring Power of Attorney, this should be reviewed immediately after separation, especially if the person appointed is your ex-partner, as they will be able to continue to deal with your finances on your behalf.
8. If you have a family trust, you should review the trust deed so that you are fully aware of what powers your ex-partner might have, including whether they can change the trustee.
9. You may wish to consider a Testamentary Trust, which is a Trust that comes into effect after the person who created it has died. Testamentary Trusts are usually created to benefit a person’s children. There are many tax benefits which maximize the net income that beneficiaries of the Trust will receive.

If you are going through a separation, you will be experiencing major changes to your life. It is important that you review your estate plan and continue to do, to ensure that your estate plan in is line with your objectives.

Should you need assistance in updating your estate plan or if you are just starting out in your family law matter, please contact us to discuss your immediate concerns and first steps. You can reach us on 8525 2700 or click here to request an appointment with one of our experienced team.

Article written by Kirstin Attard
Photo by Ümit Bulut on Unsplash