Separation and estate planning in Alberta
The end of a marriage or common-law relationship causes changes in many important aspects of your life. It can be a period of considerable turmoil, and it is not surprising that one area people may forget to deal with is the impact of the separation or divorce on their estate planning.
The end of your relationship probably means that some of the people named in your will, your personal directive or your power of attorney are no longer the people you want to be there. You may also have new people in your life who need to be added.
In addition, the separation or divorce has likely caused changes to your property and assets, such that the distribution provided for in your will may no longer make sense.
Learn More → Is an Ex-Spouse Entitled to the Deceased’s Estate in Alberta?
How Does Separation or Divorce Affect My Will?
When couples prepare wills during a marriage or common-law relationship, they often name their spouse or partner as a beneficiary of some or all of their assets, and/or as the executor or personal representative to administer the distribution of their estate. After a separation or divorce, these designations may no longer reflect what the testator would want. What happens if he or she passes away before the will gets changed?
The answer depends on whether the divorce or common-law separation has been finalized.
Under the Wills and Successions Act, if a person has passed away after getting divorced, but before changing their will, any provision naming the former spouse as a beneficiary, or appointing him/her as an executor, is deemed to have been revoked. This means that the former spouse may not inherit, and may not act as executor. Instead, the will is interpreted as if the former spouse had predeceased the testator.
However, for this rule to apply, the divorce must be final – that is, a decree of divorce must have been obtained from the court. If the parties have separated or are in the process of divorce proceedings but the divorce has not been finalized, the will remains in force (Parchen Estate (Re), 2016 ABQB 345).
The rule applies in the same way to common-law spouses, which the legislation refers to as adult interdependent partners. A will naming the former spouse or partner as a beneficiary or executor is deemed to have been revoked, but only if the parties have become former adult interdependent partners. This occurs either by a written agreement between the parties, by living separate and apart for one year with the intention of not continuing the relationship, if one of the partners marries or enters an adult interdependent relationship with someone else, or if the they obtain a declaration of irreconcilability under s. 58 of the Family Law Act.
This means that if you and your spouse have separated, but not divorced or become former interdependent partners, any dispositions you have made to your spouse, or any powers you granted to him or her, remain valid, unless you have drafted a new will.
Note that if you do want your former spouse to remain a beneficiary or executor in your will despite getting divorced or ending the common-law relationship, it is important to ensure your will contains a stipulation to that effect. Otherwise, the deemed revocation applies, and your spouse will not be able to inherit.
New Relationships and Blended Families
Even if your divorce or separation is final, your will likely needs an update in order to name new executors or beneficiaries. Perhaps your old will included your former spouse’s family members, or perhaps you have formed a new family. It is important to have a new estate plan that reflects your new life.
If you start a new relationship, determining how to distribute your estate can become more complicated. Under Alberta law, your new spouse may stand to inherit a substantial portion of your estate if you pass away without a will. In addition, even if you have a will, other rules related to matrimonial property may come into play, giving your new spouse a claim on your property ahead of your children. If this is not your preference, it is important to prepare a will that sets out your wishes, and possibly also to consider a pre-nuptial or post-nuptial agreement that clarifies the understanding you have with your new spouse.
If you and your new partner have young children, and you become a blended family, there may be additional factors to consider, such as who becomes a guardian for the children if one or the other of you dies. In addition, if you have not made any provision for your new partner or his/her children in your will, they may be entitled to apply to a court for maintenance out of your estate. This process may be expensive and stressful for them, and may cause conflict with others who also stand to inherit.
What Other Documents are Affected?
In addition to a will, most people who have done some estate planning also have a personal directive, which designates an agent to make decisions about their medical and personal care, and an enduring power of attorney, which identifies a person or persons empowered to deal with their property and finances, in the event that they become incapacitated. Following a divorce or separation, it is a good idea to take a look at these documents to make sure they still reflect your wishes.
You should also be consider whether beneficiary designations that you have made in your pensions or life insurance, or investments such as RRSPs, RRIFs, may need to be adjusted.
It is not unusual that decisions about who you want to leave property to, and how you want your estate handled, will change over time as a result of various life events. If you have gone through a separation or divorce and would like to review arrangements for your estate, contact one of our experienced estate planning lawyers.