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Getting divorced? Don’t forget to update your estate plan

by Anita Phillips

Going through a separation and divorce requires a couple to make tough decisions about living arrangements, joint assets, personal property and parenting schedules to name just a few. However, one aspect that is frequently overlooked is what happens to your will. Married spouses are often surprised to learn that estate laws don’t recognize the state of being separated. 

As both a family lawyer and an estate lawyer, I have a deep understanding of both areas of the law and how they interact. When I first meet with a family law client, I will recommend they review their estate plan and make a new will right away. It’s not only about protecting your estate from your ex-spouse, but also helping your loved ones avoid the pain and expense of litigation in the event you die before your divorce is finalized.

Your will remains valid after separation

If you are legally married but separated with a will, it remains valid. So, one of the first things you should do is replace your will with one that includes new terms. If you owe money to your former spouse — such as an equalization payment or spousal support — address it in your new will. Otherwise, your ex-spouse could sue the estate, resulting in unnecessary hassle and legal fees for your beneficiaries.

While you might think it’s unlikely that either you or your former spouse will die during separation, it happens. Amicable spouses may be divorced after a year, but others may drag out the process for years. I’ve seen several situations where spouses have died during separation with minor children involved, and it’s an avoidable mess. Anything you can do to ensure your estate is dealt with as smoothly as possible will give you peace of mind and significantly assist your beneficiaries. 

At the same time you review your will, revisit your powers of attorney. If you had powers of attorney made while you were in the relationship — likely naming your spouse — those still exist even if separated. Unless you update these documents, your former spouse has the right to make important financial and health care decisions on your behalf, which is probably not what you want.

In addition, review RRSPs, TSFAs, pensions, life insurance, etc., to examine the beneficiary designations, which can be revoked and renamed in the new will.

What happens to your will when divorced? 

Unlike getting married, your will is not automatically revoked on your date of separation. Once you are legally divorced, a will is read as if your former spouse died before you. So, if the former spouse was named as your estate trustee or beneficiary, your estate would be distributed to your alternates. In the rare event you didn’t name any substitutes, the rules of intestacy would be triggered — but more on that later. 

Generally, if you’re married and have a will, you’re probably giving your spouse everything or a large chunk of your estate. Although your assets may be protected from your ex-spouse in this scenario, it’s not ideal — especially if children are involved. Update your will upon separation and spell out precisely what you mean, rather than relying on the interpretation of the law.

What if I don’t have a will? 

If you are one of the estimated 51 per cent of Canadians without a will, one of the first orders of business upon separation is to get one.

When married spouses are separating, and there’s no will, the law of intestacy applies. So, essentially, if there are no children, your ex-spouse may get everything. However, if there are children, your former spouse could receive the first $200,000 — known as the preferential share — as well as a portion of the residue, which is what’s left after the kids receive their entitlement. 

Without a will, there’s no way to hold money for children beyond the age of 18. It’s also difficult to access any of the funds kids might need before turning 18 unless someone — including the surviving parent — applies to the court to get access to that money.

With a valid will in place, you can set up a trust that holds the money until you think your dependents are old enough to manage and name a guardian in the event both you and your spouse die. 

Common-law considerations

For couples who lived together but never married, there isn’t a formal process to part ways. As a result, it often comes as a shock to common-law couples that they don’t have the same legal rights and obligations as married couples. 

When advising a common-law spouse without a will, I’ll look at whether their partner might have a claim against them. If you die — whether you’re happily together in a decades-long relationship or estranged — your common-law spouse is not automatically entitled to anything from your estate and they would have to bring a legal claim against your estate to get anything.

Suppose you and your common-law spouse have purchased a house together or have children. In that case, an experienced family law and estate lawyer can provide legal advice, prepare a separation agreement and draft a will that considers obligations such as spousal support or constructive trust interests. If you skip these steps, your estate could be dealing with a lawsuit and your intended beneficiaries may have to deal with a lengthy and expensive dispute.

Where there’s a will, there’s a way

The bottom line is everyone should have a will, including happily married or common-law couples. Many people don’t want to think or talk about death, but it’s always a better idea to have a will than not. Don’t put it off because you can’t decide who should be the estate trustee or guardian for your children. Just do it — you can always change it later. 

While online wills are readily available and many lawyers dabble in wills as part of their general practice, I would not recommend going that route, especially if you are separating. It’s essential to get advice and assistance from an experienced legal professional who has a deep understanding of the unique intersection of family and estate laws. If you would like to learn more, we would be happy to help you.

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by Anita Phillips

Anita Phillips has extensive experience as a family and estate law lawyer. She has particular expertise in negotiating and drafting domestic contracts and in developing estate plans for clients with blended families and for business owners.