Going through a divorce process is stressful. There are lots of things to think about and one of these is likely to be what you should do to protect your hard-earned money.
It is essential to have a suitably drafted Will in place to ensure that your assets pass according to your wishes in the event of your untimely death.
If you die without a valid Will, the intestacy rules will dictate how your assets are distributed following your death.
If you are married without children, the intestacy rules state that your entire estate will pass to your spouse. If you are married with children then your spouse keeps the first £270,000 and all the personal possessions. The remainder of the estate is divided in half, with one half passing to the spouse and the other half being divided equally between the children.
A divorce is only legally finalised once decree absolute has been granted. If you were to die before this, without a valid Will, a substantial portion of your assets would pass to your spouse – this is not an ideal scenario for most people.
This outcome can be avoided by making a Will stating who you want your assets to pass to. If you have young children, it is likely that a flexible Will containing some form of protective trust would be best for you. The Will would appoint trustees to manage funds for your children on your behalf until they reach a certain age. It would also address who should be guardian(s) of your children in the event that you and their other parent die whilst the children are under the age of 18.
If you already have a Will which benefits your spouse, you ought to update this early on in the divorce process. It is not unheard of that someone will die whilst part way through divorce proceedings, with the unintended consequence of assets passing to their spouse.
Even once the divorce process is complete, it is important to note that divorce does not revoke a Will. It is clearer and better to take control and prepare a new Will which does exactly what you want it to do.
It is easy to push preparing a Will to the bottom of the to-do list. However, as part of the divorce proceedings you will most likely be taking a closer look at your assets and financial position. This is an important step in the process of making a Will, so it makes sense to tick this off the list at the same time.
It can be difficult to know what sort of Will you want (or need) during the divorce proceedings when you do not know what your asset position will be at the end of the process. Rather than taking the risk of waiting to update your Will, it is advisable to ask your solicitor to prepare a “holding Will” for you. This can put some very simple protections in place during the interim. The holding Will can easily be revisited once the divorce and financial settlement are finalised.
When reviewing your finances and your Will, you should also ensure that you do not overlook assets which do not usually pass by Will, such as life policies written in trust, death in service benefits and pensions. Any nomination forms and expressions of wishes should be brought up to date to reflect your wishes.
Note: All references to “marriage” above include civil partnerships and references to “spouse” also include civil partners.
About Stephanie Mooney
Stephanie Mooney is an Associate in the Private Client team at law firm Kingsley Napley LLP. She advises on succession planning, the preparation of Wills, inheritance tax, trust creation and administration, mental capacity and the administration of estates.