In the aftermath of separation most former spouses focus on issues such as parenting plans, child or spousal support and division of family assets. Often overlooked is making changes to your estate plan after separation, including changing the designations of your now former spouse as Executor in your Will, Attorney under your Power of Attorney, and Agent in your Personal Directive. Also, many spouses name each other as the first named beneficiary for term or whole life insurance policies, RRSPs, RIFs and pensions. Typically, division of these and other matrimonial/family assets occurs in the period following separation, usually with the assistance of legal counsel in mediation or arbitration. But what happens if one of the parties becomes deceased prior to obtaining a final Settlement Agreement or Divorce Judgment? Unfortunately, the existing designations prevail and the surviving spouse may end up taking the full benefit of those assets, including assets that may have otherwise been exempt from division such – inheritances, gifts from third parties, life insurance proceeds and awards from personal injury claims.
Here is a brief list of items to review and, if appropriate, change as soon as possible after separation.
- Change the designation of your spouse as your Executor, Attorney and Agent. Once you have signed a Separation Agreement that substantially settles division of family property or obtained Divorce Judgment, your former spouse is deemed to have predeceased you, effectively voiding their designation as Executor, but not their designation as Attorney or Agent.
- Change your designation of specific and residual beneficiaries in your Will. As above, any designations of specific or residual gifts in your Will to your former spouse remain effective until a Settlement Agreement or Divorce Judgment is obtained.
- Change your designation of beneficiary to RRSPs, RIFs, life insurance and pensions. Beneficial designations of these items fall outside of your estate and will remain effective even if you have made changes to your Will.
- File Statement of Claim for Division of Family Property (typically in conjunction with a claim for Divorce) and register Certificates of Lis Pendens on all real property. This is particularly important when title is held as joint tenant.
- Change your designation of Guardian for minor children within your Will. If your former spouse predeceases you, and you become deceased before your children reach the age of majority, any designation of a Guardian under you Will is effective immediately on your death. This avoids confusion and a potential legal conflict over who will take care of your children during their minority.
Written by Gary Kirk