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Scotia Wealth Management

Importance of estate planning after a divorce

Make sure your money goes in the right direction after a relationship breakdown

September 1, 2021

Our lives don’t always go according to plan, that is why it’s necessary to review your estate plan after significant life changes.

Our lives don’t always go according to plan, that is why it’s necessary to review your estate plan after significant life changes.

You may have drafted your Will once you got married but, if your marriage breaks down, you should re-evaluate your plan and amend who receives your assets in the event of your death.

Your Will

Usually, when couples marry, they make each other the beneficiary of their Wills. A Will is not automatically revoked by divorce. If you get divorced, any provisions in the Will where the former spouse is left assets or made the Executor are revoked. This is subject to a contrary intention appearing in the Will. Therefore, you will need to reassess the arrangements in your Will. Consequently, if you are drafting a new Will after a marriage breaks down, you should make sure that any dependent children are adequately provided for on your death. The Family Law court can step in and overrule your Will if you don’t. Take the opportunity to review our Will planning checklist to help guide you when planning your estate.

A professional should be consulted when a Will is being considered. There are legal and family issues that need to be addressed if this route is taken.

RRSPs, RRIFs and life annuities

With these investment structures, you can (and should in most circumstances) have named beneficiaries. When your relationship breaks down, you will need to look at your investments (RRSPs, TFSAs, RRIFs etc) to determine if the recipients are still appropriate in your new situation.

Insurance

In many cases, married couples name each other as the beneficiaries of their life insurance policies. If you are going through a separation or divorce, you may want to reconsider who you name as your beneficiary. If you do not contact the insurance company, your former spouse will continue to be the beneficiary of the policy. In the case of relationship breakdown, you may want to change the life insurance coverage to provide for your children should anything happen to you.

Depending on the nature of the separation agreement, you may be required to buy life insurance with your former spouse and/or children named as the beneficiaries. This is typically the case where spousal and/or child support is being paid by the primary income earner and ensures that if the supporting spouse dies, there would be enough money to support the children. In the case of this type of policy, the beneficiaries are irrevocable, meaning the recipient cannot be changed to someone else without the written permission of the current beneficiary.

Schedule an appointment today to review your estate planning and how a divorce can impact your insurance coverage.

The process of finding a financial advisor can be overwhelming. It is our job to make that process simpler and easier.

Dri Financial Group’s proprietary Wealth Navigator Process is designed with you in mind.

Its structured framework helps you make an informed decision and feel confident in our team and management practices before we get started.

We offer you a range of services from creating bespoke financial plans and providing investment advice to helping you take advantage of our investment models. If you would like more information on the Wealth Navigator Process or our team, call me any time at 416.355.6370 or email me at richard.dri@scotiawealth.com.
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Legal

This publication has been prepared by Scotia Capital Inc. and is intended as a general source of information only and should not be considered as personal and/or specific financial, tax, pension, legal or investment advice. We are not tax or legal advisors and we recommend that individuals consult with their qualified advisors before taking any action based upon the information contained in this publication. Opinions and projections contained in this publication are our own as of the date hereof and are subject to change without notice. While care and attention has been taken to ensure the accuracy and reliability of the material in this publication, neither Scotia Capital Inc. nor any of its affiliates make any representations or warranties, express or implied, as to the accuracy or completeness of such material and disclaim any liability resulting from any direct or consequential loss arising from any use of this publication or the information contained herein. This publication and all the information, opinions and conclusions contained herein are protected by copyright. This publication may not be reproduced in whole or in part without the prior express consent of Scotia Capital Inc.