It’s never easy, going through a divorce process can be extremely stressful for everyone. There are lots of areas to think about and one of these is likely to be what you should do to protect your hard-earned money. It is vital to have a suitably drafted up to date Will in place to ensure that your assets pass according to your wishes in the event of your untimely death.
If you die without a valid Will, the intestacy rules will dictate how your assets are distributed following your death. If you are married without children, the intestacy rules state that your entire estate will pass to your spouse. If you are married with children, then your spouse keeps the first £270,000 and all personal possessions. The remainder of the estate is divided in half, with one half passing to the spouse and the other half being divided equally between the children.
Remember – a divorce is only legally finalised once decree absolute has been granted. If you were to die before this, without a valid Will, a substantial portion of your assets would pass to your spouse – this is not an ideal scenario for most people.
This outcome can be avoided by making a Will stating who you want your assets to pass to. If you have young children, it is likely that a flexible Will containing some form of protective trust would be the best option for you. The Will would appoint trustees to manage funds for your children on your behalf until they reach a certain age or are no longer influenced by their remaining parent. It would also address who should be guardian(s) of your children in the event that you and their other parent die whilst the children are under the age of 18.
If you already have a Will which benefits your spouse, it’s advisable to update this early in the divorce process. It is not uncommon that someone could die whilst part way through divorce proceedings, with the unintended consequence of assets passing to their spouse – especially with valuable assets that are owned jointly (property). Even once the divorce process is complete, it is important to note that divorce does not invalidate a Will.
It is easy to push preparing a Will to the bottom of the to-do list. However, as part of the divorce proceedings you will most likely be taking a closer look at your assets and financial position. This is an important step in the process of making a Will as once the divorce absolute is complete your Inheritance Tax allowances change, lowering the amount you can leave free of tax.
It can be difficult to know what sort of Will you want (or need) during the divorce proceedings when you do not know what your asset position will be at the end of the process. Rather than taking the risk of waiting to update your Will, it is advisable to prepare a temporary Will. This can put some very simple protections in place during the interim. The temporary Will can easily be revisited once the divorce and financial settlement are finalised when you have a clearer picture of what assets you now have.
When reviewing your finances and your Will, you should also ensure that you do not overlook assets which do not usually pass via the Will, such as life policies written in trust, death in service benefits and pensions. It is important to make sure these are changed to reflect your wishes on who you now want to receive these benefits.