24/07/2013

There are the 7 Deadly Sins, the 7 Dwarves, the Magnificent 7 and now there’s the 7 different types of marital status.  When considering estate planning it is vital to know which type applies.  Here they are.

1    Single, never married.

This person is probably young with a limited number of beneficiaries to give their assets to.  There’s clearly no need to worry about rules relating to a spouse.

2    Single but considering marriage.

Now we need to start worrying about the potential spouse. Once a person gets married any Will they’ve made beforehand is automatically revoked. We need to be sure that if a marriage is on the horizon we don’t waste a lot of time preparing documents which will only have to be redone. You can create a Will in contemplation of marriage so that’s something that needs to be considered if marriage is pending.

3    Single, widowed

What had happened in relation to the deceased spouse’s estate may need to be taken into account in working out the surviving spouse’s estate plan.

4    Single but in a serious relationship

The question is: how serious is this relationship? Has it become a ‘virtual marriage’, namely a de facto relationship that gives to the partners all the usual entitlements of a formal spouse? There is a rough rule of thumb of two years cohabitation which makes the relationship a de facto relationship. It can actually be shorter than that in certain circumstances, so it is vital to get all the facts.

5    Married, first time

Like ‘never married’ at least with ‘first time married’ everyone knows where they stand and what their duties and obligations are, as well as their wishes.  Hopefully there is a match so as not to complicate the estate planning too much.

6    Married, again

Second, third and subsequent (!) marriages are the bane of the estate planner’s existence as efforts are made to provide for current spouses, former spouses and multitudes of children – “yours, mine and ours”.  Great care must be taken not to set the estate up for a later claim by a potential beneficiary who believes they did not receive their due entitlement from the estate.

7    Single (again), divorced

In some States your ex-spouse is entitled to make a claim on your estate notwithstanding that you’ve been divorced and notwithstanding that you’ve made a property settlement under the Family Law Act.  Be sure of what the rules are in your State and if it is the case that an ex-spouse can make a claim on the estate perhaps steps need to be taken to deal with that potential.  For example, in NSW you have to make an application to the Supreme Court for the ex-spouses to waive their rights against one another’s estates. The procedure is normally handled by the Court “in chambers” (ie no court hearing as such) and so it is nowhere near as horrendous as Family Law proceedings. But the potential for a claim by an ex-spouse comes as a surprise to some people, and it’s one of those things that sometimes slips through the cracks.

The days when there were only single people and married people are gone – at least when it comes to estate planning.  We now have a veritable smorgasbord of marital status and each has its own challenges and issues when preparing an estate plan.

For all your estate planning needs, please contact Townsends Business & Corporate Lawyers on (02) 8296 6222.