Rod Cunich explains the consequences of relationship changes on your Will.
An ignorance and/or failure to make changes to your Will when there’s a change to your relationship status can lead to misery – to you whilst you’re alive, and loved ones when you die. So here are a few things you need to consider for the ‘happiness’ of all concerned.
If you remarry, the marriage will invalidate your existing Will. Depending on the state or territory in which you live, it's likely that your new partner will inherit everything under the intestacy laws. In other states, however, children receive a significant portion and even previous partners may also be entitled to a share. So, it’s better to have a current Will to avoid uncertainty or, worse, your estate going to the wrong beneficiaries.
If you separate from your spouse, the separation has no impact on your existing Will. If you die whilst separated and not yet divorced, your assets will be distributed according to your Will. In most cases, your ex-partner will be the beneficiary. This is not an ideal outcome. The solution is simple: prepare a new Will when you’re preparing to separate.
Separation rarely happens spontaneously, so you have more time than you realise. If you don’t have the sufficient headspace to get it done at the same time, then prepare a new Will immediately after you separate.
Second marriages and de facto relationships are now part of the norm. Why? There are two main reasons.
Firstly, 43 per cent of first marriages end in divorce, so new relationships are common, as are the number of blended families – that is, one or both parties have children from an earlier relationship.
And, secondly, better healthcare sees us living to a grand old age. And many a widow/er will set-up house with a new-found love after their partner has passed away. Seventy- and 80-year-olds are now entering relationships that can last five or 10 years, or more. This is considered a long-term relationship in Australia.
Whether the new relationship is a de facto relationship or marriage, the Family Law in Australia creates rights in your new partner's assets as time passes. The terms of your pre-relationship Will do not protect your beneficiaries, as the rights of your new partner will, over time, take priority over their rights.
With every new relationship you need to revisit your Will to protect the interests of other beneficiaries, such as your children. However, a word of warning: Merely doing a new Will may be insufficient. You may need to enter a Family Law Agreement with your new partner to control what you wish to leave each other (if anything) and protect the inheritance of other beneficiaries. This applies equally to both parties.
An agreement will provide certainty about your intentions but, unfortunately, it doesn't provide absolute certainty for your loved ones. This is because the courts don't like these agreements, even though they’re sanctioned by legislation. So unless your agreement is prepared in strict compliance with the law and is updated regularly to take into account changes in your circumstances, a court may set your agreement aside and impose its own asset-distribution regime.
Nevertheless, it’s better to have an agreement than not. The key is to do it right and keep it current. As with your Will, an agreement should be reviewed whenever there is a change – i.e. birth, death, marriage, separation, acquisition or disposal of an asset, receipt of an inheritance, and/or a financial loss or gain.
Slater and Gordon lawyers recently conducted a national survey and found that 34 per cent of Australians have experienced a dispute or family disharmony over a deceased estate. That’s many of us!
Your life partner and children have a statutory right to challenge your Will. While others you have supported financially or even emotionally can also challenge your Will if they can prove their dependence on you.
Will a claimant be successful? The court's role is to determine whether the deceased made ‘adequate provision’ for the claimant in their Will. The court examines the current needs of the claimant, the circumstances of your other beneficiaries and the nature and size of your estate. The history of past dealings and conduct is relevant but not determinative. It’s often the ‘black sheep’ in the family who you’ve had to bail out of financial problems who succeeds in proving a ‘need’ for greater provision from the deceased estate.
So how can you handle all of these issues?
- Be aware of the issues – and you’re already halfway there.
- Consult an estate-planning expert. As the saying goes: Spend a penny today to save a pound tomorrow.
- Repeat the above two steps whenever you have a change in your life, or every five years – whichever comes first.
Rod Cunich is National Practice Group Leader for Wealth Protection, Succession and Estate Administration at Slater and Gordon lawyers. For more information visit Slater and Gordon Lawyers. This article is of a general nature only and not intended to be legal advice or relied upon. You should seek your own personal legal advice from an accredited professional.
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