It is very common for spouses, whether married or “common-law” (in Alberta, this is called “adult inter-dependent partners), to visit a lawyer together to develop their estate plan. Indeed, most couple’s estate plans (ignoring complexities raised by blended families) simply appoint each other to be their executor, and leave the entire estate to each other and then to their children equally.
But what happens on the breakdown of that relationship? At the end of a relationship, the first consideration is often (and properly) the welfare of the children and other custody related matters. Second, the parties will turn their attention to the division of their family property. Updating estate plans is often last on a very long and stressful list. Parties may incorrectly assume that their separation automatically adjusts their estate plan – and unfortunately, it does not.
Settling a division of family property takes time, and in the case of a contested dispute, may even take years. So what happens if one party dies during that time period, without having updated their will?
If the deceased spouse had a will, then any gifts to the surviving spouse (including the entire estate), and any appointments of the surviving spouse as executor, continue to remain valid, unless the parties were legally divorced at the time of death or had ceased to be adult inter-dependent partners. This means their estate may flow to their estranged spouse, where they likely did not intend.
If the deceased spouse did not have a will, then the surviving spouse may receive some or all of the deceased’s estate according to the intestacy provisions of the Wills and Succession Act of Alberta. This is true unless the parties had formally divorced, had ceased to be inter-dependent partners, or had been living separate and apart for a period of at least 2 years. The entire estate may flow to the estranged spouse which again, was not likely the deceased’s intention.
What does this mean for you? If you are in the process of separating from a spouse, it is critical to update your will (or make one if you do not already have one) to ensure that your spouse is not named as your executor and does not receive the estate. Do not wait for the dust to settle on your family property settlement.
The situation is even worse with certain types of assets that have beneficiary designations – such as life insurance. In that case, the relevant legislation does not follow suit as it does in estate planning – the life insurance can flow to a surviving spouse, even if legally divorced, unless the designation was updated. Thankfully, these types of designations can be updated in your will, and/or an estate planning lawyer can walk you through how to update these at your various financial institutions.
If you find yourself in the midst of a relationship breakdown, we encourage you to reach out to an estate planning lawyer to discuss your estate plan and to develop a properly drafted will. This is a very complex area of law, and home-made or poorly drafted wills can lead to unintended, and very expensive, consequences.
If you are in the process of separating from a spouse, we encourage you to contact our Estate Solutions group.
Written by Kayla Thompson (March 2021)