| We
take this opportunity to advise you that once you have
separated from your spouse you should consider post-separation
estate planning.
The
following information may assist you regarding post-separation
estate planning.
A.
YOUR WILL
1)
Separation does not revoke any bequest you have made
to your spouse under your Will. Revise your Will to
ensure that you are not leaving anything to your spouse
which you would not want him or her to have. Pay particular
attention to what will happen when you and all of
your children are gone, as the result may be an intestacy
under which your spouse will receive everything. This
can happen in one of two ways:
a)
a common disaster in which you and all of your children
die together or
b)
your Will calls for a delay in distributing each child’s
share until a specified age and none of your surviving
children reaches that specified age.
You can avoid this problem by naming an alternative
beneficiary for either situation.
2)
If you do not have a Will, make one immediately, so
as to avoid the intestate succession rules which would
give your spouse a preferential share of your estate
as set-out by Succession Law Reform Act and all (where
there are no children of the marriage) or part (one-half
where there are two or more) of the residue of your
estate.
3)
Once you are divorced, neither of the preceding matters
need be of concern to you, as your ex-spouse will
be precluded from taking anything under your Will
(unless your Will indicates otherwise) or from sharing
on an intestate distribution if you do not have a
Will.
4) Remove your spouse as an executor of your estate.
This will ensure not only that he or she will not
administer your own estate, but also that your spouse
will not inherit the executorship of any estate you
may be administering as executor at the time of your
death. (Once you are divorced, an appointment of your
ex-spouse as executor of your Will is automatically
revoked.)
5)
If you are legally obligated under a Separation Agreement
to make support payments for your spouse or child(ren),
you should ensure that your Will clearly indicates
whether amounts to be paid to or for either of them
under the Will are to be in addition to, or in satisfaction
of, any support obligation.
6)
Your Will can direct your Trustees not to pay your
spouse amounts intended to benefit a child while the
child is in the spouse’s custody, but instead
to make payments directly to third parties (for example,
camp fees, school tuition fees, dental bills).
7)
While your Will cannot wrest legal custody of your
child from the surviving spouse from whom you are
separated, your Will can indicated your choice of
legal custodian for your children in the event that
your spouse does not survive you. The person you choose
will have legal custody for 90 days. Thereafter, permanent
legal custody will require a court application, in
which case your choice of legal custodian, while not
binding on the court (which will do what it considers
in the child’s best interests), will have persuasive
value.
8)
Remarriage automatically revokes any pre-existing
Will (unless the Will indicates otherwise).
B.
RRSPs AND LIFE INSURANCE
Neither
separation nor divorce will revoke beneficiary designations
under your insurance policies (both individual and
group), RRSPs, pension and other deferred income plans
which permit beneficiary designations where a policy
or plan designates your spouse to receive the policy
or plan benefits on your death.
C.
JOINTLY OWNED PROPERTY
1)
Sever any joint tenancy existing between you and your
spouse on any real property.
2)
Where possible, convert any joint account with your
spouse to an individual account in your name.
D.
SIGNING AUTHORITY
1)
Remove your spouse as signing authority on personal
bank accounts.
2)
Cancel your spouse’s right to have access to
any of your safety deposit boxes.
3) If you own shares of a private company, review
the signing authority set-out in the by-laws and banking
and other resolutions to ensure that your spouse no
longer has any signing authority. You may also have
to deliver corporate documents to the bank(s) or other
financial institution(s) where the corporation does
its business.
E.
POWER OF ATTORNEY
Revoke
any Power of Attorney you may have previously given
to your spouse. Deliver the written revocation to
him or her and demand the return of all executed copies.
In any event, you should lodge a copy of your written
revocation with all third parties to whom your Power
of Attorney may have been provided.
F.
GUARANTEE
If
you have co-signed for any loans or lines of credit
acquired by your spouse or by his or her private company,
consider giving notice to the appropriate financial
institution(s) that you are revoking your guarantee.
(This will not let you off the hook for indebtedness
incurred prior to your giving notice.) Do not forget
to consider any joint bank accounts with overdraft
protection.
G.
INCOME TAXES
You
may have to reconsider your estate plan, to the extent
that you are not leaving property or RRSPs to your
spouse. That choice may mean the loss of certain tax
deferrals which are available under the Income Tax
Act for transfers between spouses. As a result, you
may have to review your life insurance coverage to
deal with any significant income tax liability which
may arise on your death as a result of giving up those
tax deferrals.
Should you have any questions or concerns
respecting all of the above, please contact me. |
