When a relationship breaks down it is important that both parties get their own financial affairs in order. Often a client who is divorcing is keen to make sure that the other party no longer stands to inherit anything from their estate if they pass away, so updating the will is a priority. This article will go over some of the key things to consider when advising a divorcing client on their estate planning. That said, not all relationship breakdowns end dramatically with bags on front lawns, so we’ll also look at what needs to be considered when drafting a will for someone who wishes to include their soon-to-be ex-spouse.
Is there an existing will?
You should confirm whether the client has an existing will or not. Where they do not have a will, they should be made aware that if they were to die before the Decree Absolute they are still legally married and therefore their spouse will be entitled to a share of their estate under intestacy. This may be a reason to consider expediating the drafting of the will. Alternatively, where their affairs are more complex they may wish to put in place a simple temporary will to avoid assets passing to their spouse whilst they consider more complex distributions or trusts.
Do they own any property jointly?
If the client and spouse own any property together, it would need to be confirmed whether these are held as joint tenants or tenants in common. If it is tenants in common, they can distribute their share of the joint property under their will. If it is held as joint tenants however, the client should be advised that their interest in the property would currently pass by survivorship to the spouse if the spouse survives them regardless of the terms of the will. On the other hand, however, if they were to survive their spouse, the spouse’s share would pass to them.
The client may wish to consider severing to tenants in common so that they can gift their share under their will. It would then need to be considered whether the spouse will agree to the severance or whether a unilateral severance to serve notice on them is needed.
Is the spouse to be included in the new will?
There will be rare cases where divorce is amicable and the spouse is still to be included in the will, either as a beneficiary of a gift or alternatively as an executor or trustee. A common example may be where the client and spouse have joint children and the client still wishes for the spouse to act as a trustee for the children’s inheritance.
Where the spouse is to be a beneficiary, or appointed in a role (such as executor or trustee) in the will, it should be considered whether that appointment will still apply after the divorce or not as S18A Wills Act 1837 will apply. Where a will includes a gift to a spouse or appointment of the spouse and the testator and spouse divorce, S18A takes effect and causes the gift and appointment to take effect as if the spouse had died on the date the marriage ended. This takes effect unless there is contrary intention in the will.
In the event that the will includes gifts or appointments of the spouse, and the client wishes these to still apply after the divorce, the will would need to include an exclusion of S18A.
Inheritance 1975 Act concerns
Where the spouse is to be excluded from the will, or only receive a limited benefit, the client would need to be advised that the spouse may still make an application under the Inheritance (Provision for Family and Dependants) Act 1975 due to lack of reasonable provision from the estate and this could still apply after the divorce. It is commonplace however to include within the Decree Absolute a bar on each party from bringing an application under the 1975 Act for lack of reasonable provision under S15 of the Act. This is, however, not always the case.
Children and Guardians
Where the client and spouse have children together, assuming both parents have parental responsibility (which will be the case where the couple are opposite sex), the client should be aware that any guardianship appointment in their will could not take effect on their death if the other parent survives them. The only exception to this would be the client has a Child Arrangements Order (previously residence orders and contact orders) in force naming them as a person with whom the client was to live (unless the order was also made in favour of a surviving parent of the child).
Advice following the divorce
A person’s estate may change dramatically following a divorce and a will they made before divorce may no longer reflect their wishes. It would be advisable that they revisit their will following the Decree Absolute and Consent Order are issued to ensure that it still reflects their intentions.
In this type of case, it is advisable that they provide copies of the Decree Absolute and Consent Order to see if there are any terms which may impact their ability to distribute their estates. This would be advisable when dealing with any divorced client.
Conflicts of Interest
Where you originally prepared wills for a spouse and one of them wishes to rewrite their will following the breakdown of the relationship, you would need to consider whether you have a conflict of interest or not. This does not have a particularly simple answer and would depend on the facts of each case, for example the terms of the original will, whether both parties are being retained as clients and whether the divorce has been finalised or not. This would need to be reviewed on a case-by-case basis. In the event that there is a potential conflict of interest in preparing a new will, you may need to refuse to act and recommend the client seeks independent advice.