Estate planning post separation
Once you’ve separated, it’s advisable to prepare a new Will as soon as possible. Otherwise, if you pass away without a Will, or with an older Will where your spouse was designated as a beneficiary, your soon-to-be ex stands to inherit under your estate.
While a divorce will automatically revoke any designation you made with respect to your spouse being an executor of your estate, and any gifts made to him or her, the mere fact that you are separated from your spouse doesn’t revoke anything.
Even if you’ve never had a Will while you were married, if you are separated without a Will, the laws of intestacy include your spouse as part of the group of potential beneficiaries of your estate. If a separated spouse dies without a Will and without children, the surviving spouse will inherit their entire estate. If you are separated from your spouse, particularly if you’ve been separated for a long time, this windfall to the spouse isn’t usually the result most people would either want or expect.
Typically, if you are negotiating the terms of a separation agreement with your spouse, there should be provisions regarding how spousal or child support will be paid if the payor dies prematurely- ie. prior to the end of their support obligations. An agreement can provide that support is secured by way of a life insurance policy where the spouse or child is irrevocably designated as the beneficiary (or, if the children are minors, they are designated as the beneficiaries of an insurance trust). If, for whatever reason, the insurance policy lapses and isn’t available on death, the Agreement would provide that support be paid out of the estate (assuming, of course, that there were funds available in the estate to satisfy the support).
An order for child or spousal support (or a separation agreement filed with the court) binds the estate of a deceased person. It is like any other debt of the estate.
Especially in remarriage situations, people assume that the deceased individual has the right to benefit their children over and above the financial needs of a dependent spouse. This is not the case.
Even without a existing domestic contract or court order, in Ontario, the Succession Law Reform Act can be used by any dependent to obtain support from the estate. Not only can the court attach those assets that fall into the deceased’s estate for the support of a dependent, but it can claw back life insurance proceeds, or RRSPs, that were paid out to third parties, and jointly held property that passed by right of survivorship to third parties.