How Divorce Affects Your Will and Inheritance Plans

Divorce is one of life’s most significant events, bringing not only emotional and financial challenges but also legal complexities. Among these, the effect of divorce on your will and inheritance plans is an often-overlooked issue that can have serious consequences if not properly addressed. Many people assume that once a divorce is finalised, their ex-spouse is automatically removed from their will, but the reality is more nuanced.

Failing to review and update your estate plan after a divorce can lead to unintended consequences, including assets passing to individuals whom you no longer wish to benefit. To ensure that your intentions are followed after your death, it is crucial to understand how divorce affects your will and inheritance plans and what steps you should take to protect your estate.

How Divorce Affects an Existing Will

When a person creates a will, they typically name beneficiaries, executors, and trustees, often including a spouse in one or more of these roles. However, a divorce can significantly alter the legal standing of a will:

The Legal Status of Your Will Post-Divorce

In England and Wales, divorce does not completely revoke a will, but it does result in certain automatic changes. Under the Wills Act 1837 (as amended by the Administration of Justice Act 1982), a divorce decree has the effect of treating any mention of the ex-spouse in the will as if they had died before the testator. This means:

– If your ex-spouse was named as a beneficiary, they will no longer inherit under your will.
– If your ex-spouse was appointed as an executor or trustee, they will be removed from that position.
– Any gifts or responsibilities assigned to them would typically pass to alternative beneficiaries or executors, if named in the will.

While the law assumes that individuals would not wish to include a former spouse in their will following a divorce, it is still crucial to formally update the document. Relying on legal presumptions can be risky, as complexities can arise if no alternative provisions exist.

The Financial and Inheritance Implications of Divorce

Jointly Owned Property

One of the most critical issues to address following a divorce is the status of jointly owned assets. Many married couples own property together, often as either joint tenants or tenants in common.

– Joint Tenancy: If you and your ex-spouse own property as joint tenants, your share automatically passes to them upon your death, regardless of what your will states. Divorce alone does not sever a joint tenancy. To ensure that your share of the property is allocated according to your wishes, you may need to formally sever the joint tenancy and establish a tenancy in common.
– Tenancy in Common: If property is held as tenants in common, each person owns a distinct share that can be passed under a will. This is typically preferable for divorcees who wish to leave their share to children or other loved ones instead of an ex-spouse.

Pension and Insurance Policies

Pension funds and life insurance policies often allow policyholders to name beneficiaries who will receive the funds upon their death. Divorce does not automatically change these nominations. If your ex-spouse remains listed as the beneficiary, they could still receive the proceeds unless you update your beneficiary designations with the pension provider or insurer.

Some occupational pensions provide for spousal benefits, and while these may be revoked upon divorce, it is vital to check with your pension provider to confirm the status of such entitlements. If pension sharing orders were put in place as part of the divorce settlement, these arrangements will dictate what portion of the pension remains for each party.

Inheritance Act Claims by a Former Spouse

Although divorce generally removes an ex-spouse’s rights under a will, there are circumstances where they might still make a claim on your estate after death. Under the Inheritance (Provision for Family and Dependants) Act 1975, a former spouse who has not remarried could potentially make a claim for financial provision from your estate if they can demonstrate a financial dependency.

The risk of such claims can be particularly relevant if financial matters were not fully settled as part of the divorce, or if ongoing maintenance was awarded. To mitigate the risk, ensuring a clean financial break within the divorce settlement can help prevent future inheritance disputes.

Steps to Protect Your Estate After Divorce

Create a New Will

The safest and most effective way to ensure that your wishes are properly reflected is to draft a new will after your divorce. This allows you to explicitly outline who will inherit your assets and whom you wish to appoint as executors, trustees, or guardians for any children.

A new will need not be complex, but it should express your updated intentions clearly, especially if you wish to exclude your former spouse. If there are individuals you do not wish to benefit, stating this explicitly in the document can help reduce the risk of future disputes.

Update Your Estate Planning Documents

Beyond your will, it is essential to review and update other estate planning documents, such as:

– Power of Attorney: If you appointed your spouse as your attorney in a Lasting Power of Attorney (LPA) for finances or health decisions, this should be revoked and a new attorney appointed.
– Trusts: If any of your assets are held in a trust or were part of an estate planning arrangement, review the terms to ensure they align with your post-divorce intentions.
– Guardian Designations: If you have minor children, reconsider any guardian appointments and ensure your will clearly reflects who you wish to take responsibility for their care.

Sever Joint Tenancies if Necessary

If you own property as a joint tenant with your former spouse and would prefer your share to pass to someone else, you must sever the joint tenancy. This is a relatively straightforward legal procedure but must be completed formally. Once severed, your share of the property will be treated as part of your estate rather than passing automatically to your ex-partner.

Review Your Beneficiaries on Financial Accounts

Many financial products, including pensions, life insurance, and certain savings accounts, allow you to nominate beneficiaries. Ensuring that these designations align with your wishes post-divorce is critical. Contact relevant financial institutions to update your records and prevent unintended inheritance outcomes.

Planning for Children and Future Relationships

Providing for Children

If you have children, divorce does not diminish your responsibility to provide for them. When updating your will, consider whether to establish trusts to protect their inheritance, particularly if they are minors. A trust can ensure that funds are managed on their behalf until they reach a suitable age, rather than passing directly to them or potentially to an ex-spouse for management.

Remarriage and Its Consequences

If you remarry after a divorce, it is essential to understand that a new marriage automatically revokes your existing will unless it is made in contemplation of that marriage. Without updating your will after remarriage, intestacy rules would apply upon your death, potentially leading to unexpected beneficiaries.

Second marriages often bring blended families, making estate planning more complex. You may wish to protect assets for children from a previous marriage while still providing for a new spouse. This can be arranged through specific trust structures and clear provisions in your new will.

Seeking Professional Advice

Given the complexity of estate planning after divorce, seeking professional legal and financial advice is highly advisable. A solicitor specialising in wills and probate can ensure that your documents comply with current laws and reflect your most up-to-date wishes. Additionally, a financial adviser can help reassess your wealth management strategy, making sure that your pension and investments align with your post-divorce life goals.

Conclusion

Divorce has far-reaching effects on inheritance plans and wills, making it vital to take proactive steps to review and update your estate documents. While the law provides certain safeguards, relying on automatic changes can be risky and may lead to disputes or unintended inheritance outcomes.

Creating a new will, updating beneficiary designations, and reviewing jointly owned assets are all essential steps in safeguarding your estate. By seeking professional guidance and thoughtfully restructuring your estate plan, you can ensure that your assets are distributed in accordance with your post-divorce wishes and that your loved ones are protected.