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Estate Affairs
Article by Robert Monahan
Are any of your clients planning to po p the big question this Valentine’s day?
Love is in the air! And because it’s Valentine’s day we thought it would be an apt time to look at how State and Territory Laws view relationships and Wills. After all, estate plans are usually structured around loved ones.
Did you know that marriage revokes a Will? So the second anyone says ‘I do’, their Will is automatically revoked.
In New South Wales, the Northern Territory, Queensland and Victoria, the law has been modified so that marriage no longer revokes a gift in the favour of the marriage spouse. Gifts to anyone else, however, are revoked. To avoid the automatic revocation by marriage, there is a clause that can be added to a Will to specifically state that it won’t be revoked.
So what happens when things turn sour? In Tasmania and WA, divorce revokes a Will. But in the other states and territories, divorce only revokes a gift in favour of the ex-spouse.
It is important to remember that, other than marriage or divorce, a change in relationship status does not affect a Will. For example, if you separate from your marriage spouse, it takes a year to qualify for a divorce. If you don’t want your separated spouse to benefit in the meantime, you should review your Will as soon as possible after the separation.
Case study – Kim and Tony
Consider this true story of Kim and Tony. As a newly married couple they made Wills which:
• left everything to each other
• left everything to their children (if any) if they both died, or
• left half to Kim’s parents and half to Tony’s parents if they both died without children.
Kim and Tony separated after only two years of marriage and divorced a year later. Kim tragically died in an accident two years later. Unfortunately, she had never reviewed or changed her Will.
So what was the end result? Although the gift to Tony was revoked by the divorce, as Kim had no children, her Will gave half of her estate to her parents and the other half to Tony’s parents. The failure of Kim to review her Will only exacerbated the grief experienced by her parents.
The lesson to be learnt is that people who commence or end relationships should review their estate plan to ensure their wishes continue to be documented appropriately.
So when you’re speaking to clients who are embarking on a new relationship, or thinking about ending an existing one, it’s important not only to look at their financial situation but to consider their estate planning needs.
Robert Monahan, Senior Estate Planner LL.B (Syd) ACC., Spec. (Wills & Estates)
Australian Executor Trustees
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