Going through a separation is unquestionably difficult. There are often financial difficulties, emotional upheavals, and myriad issues which must be dealt with. Things are even more complicated when children are involved.
Time and time again I speak with people who have made the mistake of not reviewing their estate planning following a separation. In a time of difficulty, it is understandable that things, even important things, may get overlooked. Unfortunately, the consequences of overlooking one’s estate planning following separation can be dreadful.
Here are the three biggest estate planning mistakes I see people make following a separation:
1. Not Updating their Will
Many newly-separated clients want to know if updating their Wills is really necessary. The answer is a resounding ‘yes’! Usually people are pretty strapped for cash at the time of a breakup. Paying to have their Will updated can be a financial challenge. However, not taking care of this can be disastrous. Even though a separation agreement may state that a former spouse has no right to the estate of their now deceased spouse, court cases have decided otherwise where the deceased spouse didn’t bother to update his or her Will.
I also caution clients to not wait until the separation is finalized. Rather, their Will should be updated promptly. I point out that if they become ill in the midst of the proceedings, they likely wouldn’t want their ex having any control.
And if a newly-separated client doesn’t currently have a Will at all, I suggest that they have one prepared as quickly as possible.
2. Forgetting about Beneficiary Designations
Separated spouses need to be aware that updating a Will may not be enough. All beneficiary designations should be changed immediately. The proper papers should be signed and filed with the institution where the asset is held or administered. This includes insurance (both group and private coverages), RRSPs, RRIFs, TFSAs, and so on.
3. Not Signing New Powers of Attorney
I caution separated clients that if they previously named a former spouse as their substitute decision-maker or attorney for personal care and they don’t update this document, do they really want their former spouse making medical treatment decisions for them especially if the breakup is acrimonious. The same goes for a Power of Attorney for Property. These documents give the substitute decision-maker or attorney a lot of power and responsibility. It is rarely appropriate to have a former spouse named.
Again, if a client is newly-separated and does not currently have Powers of Attorney, I advise that these should documents be prepared and signed as soon as possible.
If you are separated (newly or otherwise) and have not reviewed your estate planning since you separated, make an appointment to meet with me. We will review your unique situation and determine where revisions need to be made in order to protect and take care of you and your loved ones.
Reproduction of this blog is permitted if the author is credited. If you have questions or if you would like more information, please call us at 613 836-9915. This blog is not intended to be legal advice but contains general information. Please consult a lawyer or other professional to determine how the information in this blog might apply to you.
Blog posts pre-dated December 1, 2015 were originally published under Neff Law Office Professional Corporation.
