Binding financial agreements
When a marriage comes to an end, divorce is not always the obvious course of action. Subscriber Judy and her husband have been separated for some years, but opted for a binding financial agreement. However, Judy is now concerned how this may affect her liability for his debts.
My husband and I separated in early 2003. As we are not divorced I am first in line to become executor. I am worried I might be liable for his debts. We have a binding financial agreement and he got his share of our assets plus extra money. His property is in his name only and mine in my name only. We have no joint bank accounts, credit cards, mortgages or utility accounts. The agreement was through the family court and prepared by a solicitor. Any advice?
A. Provided by Slater & Gordon
The law states that as long as you haven’t provided a personal guarantee, as an executor of the will you are not personally liable for the debts owed by the estate.
Upon the death of your ex-partner, creditors have a claim to their share of assets in the deceased estate. If there are insufficient funds, the estate is declared bankrupt, in which case creditors only receive a portion of what is owing to them or even miss out altogether. This is not your concern.
Nonetheless, you should request that your ex-partner change his will to reflect the change in your marriage status and that he appoint a different executor. If he doesn’t do so, you have a right to serve him a letter refusing to act as his executor. If he dies, you can still refuse to accept the appointment, in which case the beneficiaries of the estate will apply to the court to have someone else appointed.
If you haven’t already done so, it is highly recommended that you amend your will as well. It may be that your ex-partner is still listed as the beneficiary of your estate after you die, which may not be your intention.
This is a good example of the importance of keeping your will up to date as your financial and personal circumstances change. As shown here, an out of date will can cause unnecessary complications.
Wills should be keep up to date regularly to reflect relationship changes – such as separation, divorce or the beginning of a new relationship – assets acquired or disposed of, the birth or death of beneficiaries, minor beneficiaries coming of age and the death or dementia of an executor.
As you accumulate wealth, have children and your life situation becomes more complex, having an up-to-date will becomes all the more important.
For further information, you can contact Slater & Gordon at 1800 555 777 or visit www.slatergordon.com.au.
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