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, says Townsends Business & Corporate Lawyers principal Peter Townsend:
1 Single, never married. This person is probably young with a limited number of beneficiaries to give their assets to. There’s 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 marries, any will they’ve made beforehand is automatically revoked. If a marriage is on the horizon, then don’t waste time preparing documents which will have to be redone. A will in contemplation of marriage can be created, so this 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? A rough rule of thumb is two years’ cohabitation makes the relationship de facto, it can be shorter 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. With second, third and subsequent marriages, the estate planner has to consider 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 that a property settlement has been made under the Family Law Act. Be sure of what the rules are in your State. If an ex-spouse can claim on the estate, then perhaps steps need to be taken to deal with that potential.
For example, in NSW you have to apply 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” (i.e. 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 sometimes slips through the cracks.
The days when people were single or married gone – at least when it comes to estate planning. Each ‘dish’ on the marital smorgasbord has its own challenges and issues when preparing an estate plan.