Imagine you‚Äôre separated from a spouse you legally married but didn‚Äôt bother to divorce as you didn‚Äôt want to marry again. Instead, you formed a common-law arrangement with another spouse.
You‚Äôve maintained a life insurance policy for many years with your ex-spouse as the beneficiary. You assume that the separation will make your common-law spouse the beneficiary of your insurance policy. But after you die, the insurance company pays the benefit to your ex-spouse. There may be little your common-law spouse can do about it, even if you intended that the common-law spouse receive the insurance payment. The ex-spouse is still the beneficiary, as the beneficiary designation was never changed.
In Canada, merely separating from your ex-spouse does not automatically legally change your will, estate plan, powers of attorney or beneficiary designations.
The Effect Of Divorce On Your Will
Divorce does not revoke your will. Existing wills are still valid. However, depending on the province, divorce invalidates gifts under your will to an ex-spouse. In British Columbia, any appointment or gift to a surviving spouse is revoked if the spouses cease to be spouses.
Still, change your will to remove your ex-spouse from the will. This ensures they will not receive any benefits from your estate under your will.
Spouses Should Start Changing Their Legal Documents When They Separate
Separating couples should start changing their wills, powers of attorneys and other legal documents as soon as they separate. Start making changes even if all the details of property division, custody and support, or trusts are still being worked out. Making the changes will make sure your soon-to-be-ex-spouse will not receive anything from the estate or have a say over your future decision-making.
Immediate changes should include:
- Wills. Your ex-spouse might still conceivably end up with your property.
- Beneficiary designations for RRSPs and insurance policies. Make your estate the beneficiary, so the proceeds will be divided according to your updated will.
- Powers of attorney for finances and health care. Remove your ex-spouse and select another person to act under your power of attorney. Otherwise your ex-spouse would have the power to make decisions on your behalf if you become ill or incapacitated.
Follow-up Changes After You Reach A Separation Agreement
Once you and your ex-spouse have finalized the details of your separation, revisit your will and other documents. Alter your estate plans and powers of attorney to account for anything required of you under a separation agreement, such as possible support payments after your death.
Even if you don‚Äôt think you will remarry again, it may be worth divorcing your ex-spouse rather than just separating. In Canada, a separated person can have two spouses: the person they legally married and never divorced, and the person they formed a common-law conjugal relationship with. Divorce should fully sever any relationship with your ex-spouse and prevent them from benefiting from your estate in any way.
If you are separating from your spouse, you should consult lawyers experienced in both estate and family law to assist you to make the necessary changes in your estate planning and other legal documents. This is even more urgent if you have a high net worth. Otherwise, you risk having your ex-spouse receive benefits against your wishes.