When a marriage or cohabitation breaks down, each spouse/partner must consider revising his or her will, powers of attorney, and financial holdings immediately. That's not to say this is easy in light of the emotional strain of such an event. However, avoiding these issues can result in even more stress. Estate planning at the time of a marriage breakdown is crucial because sudden, unforeseen events can occur during negotiations. Careful planning can ensure that such events don't worsen your current situation or your future. Consider the following:
Assets: Often spouses hold assets jointly, especially residences. I recommend severing the joint tenancy to become a tenancy in common immediately upon marriage breakdown. This means that both parties retain interest in the property, but it keeps the property from automatically going to the other spouse in the event of an untimely death.
As well, joint bank accounts, investments, etc. should be reviewed to ensure the same protection against a flow of assets automatically directed to the other party in the event of death or incapacity.
Beneficiaries: If you have named your spouse as a beneficiary on insurance policies, RRSP or other investments, you will want to consider naming someone else. These changes must be clear and in written form.
Wills: Again, you will probably want to alter your will. If you don't have a will, you should have one drawn up. According to law, if there is no will, your assets will flow directly to your spouse if you have no children or partially to him/her if you do have children. I highly recommend seeking legal advice for this. Please see my article Why do I need a Will??
Consider also that if you named your spouse executor of your will, you'll want to revise this. As well, provisions you set in your will regarding children will most likely change in the event of a marriage or cohabitation breakdown. You may also want to change arrangements for funeral/burial. When a marriage breaks down, most exes don't want to bury or be buried by their exes. (That might sound like a country song, but it's true.)
Powers of Attorney: Usually the spouse is named power of attorney, which means he/she has the authority to make decisions about the other spouse's finances and personal care. Again, this usually changes when a marriage breaks down. Most don't want the ex to authorize his/her personal care, nor do they want to have that responsibility any longer for each other. Discuss these issues with me at the outset of your marriage/cohabitation breakdown. We can make temporary changes until the marital/cohabitation issues are resolved. Then, we can review it all again to make sure everything is as you want it. That's the best way to ensure your wishes are respected.
For more information, please see my articles regarding Powers of Attorney: Planning Ahead - Make it Easier For The Ones You Love.; Power of Attorney for Property Roles, Responsibilities, and Obligations; Why do I need a Continuing Power of Attorney for Property?
The breakdown of any meaningful relationship can be most trying, but with careful planning and good advice, you can give yourself some peace of mind and clear some space for handling the tough emotional challenges ahead. Feel free to call me if you have any questions about any of these issues.
Revised March 2015