The 50 Biggest Estate Planning Mistakes...and How to Avoid Them

WHEN A LONG-TERM RELATIONSHIP ENDS, the last thing you might feel like doing is addressing your estate planning. But whether you were married or living together for a short time or a number of years, and whether you are simply separated right now or actually divorced, it is a big mistake to let your estate planning go unattended for long.

Emotions can run high when relationships end and sometimes this means people block out even thinking about estate planning or they get caught up in wanting to cut out the former spouse or partner from the will. Well, one general principle to bear in mind is that you can’t get out of your legal obligations through your will any more than you can avoid your obligations while alive. You need to get good advice on addressing your new life and how it affects your will; failing to do so will invariably end up being more expensive to your estate than if you’d sought expert assistance.

As you move through a separation from a spouse or a partner with whom you lived, the law seeks to balance the parties’ financial situation, guided by the interplay of federal divorce law and the provincial family legislation, and the many factors involved in each and every situation. If you die in the middle of the process, your estate remains responsible for your obligations to former spouses or partners, and dependent children, even if a separation agreement has not yet been reached. If a separation agreement has been signed, it may bind your estate to pay support obligations and your lawyer may recommend referring to it in your will. Even if your separation agreement does not specifically bind your estate, after your death the law may require your estate to pay ongoing child support obligations.

So what does all of this complexity mean to you if you are contemplating separation or going through it? Get advice on the best way to update your will to reflect the stage of your separation/divorce and then get to it! If you have an old will that leaves all or part of your estate to your former partner, you need to revise it with your lawyer’s guidance so that your new intentions are balanced with your legal obligations.

Put another way, it is not an option to simply remove your former spouse or partner from your will. What you do in your will must be in synch with the stage you are at in your separation and divorce proceedings and the related agreements and court orders.

In some provinces a divorce revokes aspects of an existing will that benefit the former spouse, but other provinces treat the pre-divorce will as entirely valid. Neither result ensures a good outcome and either way, a will that predates a divorce is unlikely to be an accurate reflection of either the deceased’s wishes or his or her obligations.

It’s pretty obvious that the more complicated the situation (several relationships over the person’s lifetime, children from a couple of those relationships), the more complicated the planning, but failing to plan creates a nightmare at the time of death.

While any post-separation estate planning to-do list will be incomplete because each situation is unique, points to cover with your estate-planning lawyer include:

• insurance coverage to address the terms of the separation agreement, such as the payment of spousal support for the rest of the former spouse’s life, or specific maintenance payments for minor children;

• any and all court orders and agreements in place—some will need to be included expressly in your will, others will not;

• beneficiary designations on registered plans;

• assets that may still be held jointly with the former partner, or buy-sell agreements still in effect between you and a former spouse;

• personal directives; and

• powers of attorney, these last two documents being items that you could address and update as soon as you are separated. (Note that the terminology for personal directives and powers of attorney varies from province to province.)

points to take away