Divorcing spouses must revisit their wills, beneficiaries and Powers of Attorney as soon as they’ve decided to separate.
“If the will [and other assets with designated beneficiaries] aren’t dealt with early in the process, there’s a significant risk to both clients,” says Joanne Dereta, managing director and principal of Stonegate Private Counsel LP in Toronto.
Most married couples name each other as beneficiaries, and if one spouse dies during divorce proceedings without making the change, his or her ex will receive the assets. That’s usually undesirable. Clients should also review guardianship for children, in case one parent is now unfit.
Even worse is when separating spouses are named as executors of each other’s estates. If one spouse dies, “The surviving spouse is now in a conflict of interest, because he’s essentially negotiating with himself,” says Dereta, and would have to step down. The courts would then appoint an executor, delaying the process.
In a collaborative divorce process, a provision prevents any changes to wills and beneficiary designations until both parties meet. Dereta advises addressing those issues early in the process—preferably the first meeting.
Real-estate titles must also change.
“You want to make sure you’re not obligated to debts for properties you no longer own,” says BMO Nesbitt Burns investment advisor Angela Galer-Grist.