Divorce and Estate Planning in Canada

What You Should Consider

Divorce will bring with it significant life changes that require careful attention. One of the ways divorce change’s an individual’s life is through their estate planning. Be careful not to overlook the impact divorce can have on your wills, beneficiary designations, and powers of attorney. If one fails to consider updating these documents, there can be unintended consequences, such as an ex-spouse inheriting assets or retaining decision-making authority.

Update Your Will After Divorce

In Canada, divorce will not automatically revoke a will, but it can affect certain parts of it:

• If your ex-spouse was named as an executor or beneficiary, then their designation is automatically revoked upon divorce in numerous provinces. Regardless, if you pass away during separation before your divorce is finalized, your ex could still inherit if the will has not been changed.
• If your will is not updated, the assets may be distributed based on provincial intestacy laws, which have the potential to not align with your personal wishes.

Review And Change Beneficiary Designations

Assets like life insurance policies, registered retirement savings plans, tax-free savings accounts, and pensions will allow you to name a beneficiary outside your will. Divorce does not automatically remove your ex-spouse from these designations. If one wishes to prevent accidental inheritances:

• Update your beneficiary designations on financial accounts and insurance policies.
• If your children are minors, set up a trust to ensure funds are managed responsibly and for their benefit.

Modify Powers of Attorney

If your ex-spouse was granted power of attorney over your financial and medical decisions, consider revoking and replacing those documents. Two key powers to consider are:

• Power of Attorney for Property – Allows someone to manage your financial affairs if you become incapacitated.
• Power of Attorney for Personal Care – Grants decision-making authority over medical and personal care matters.

Consider The Impact of Spousal and Child Support on Your Estate

Be careful to consider new financial obligations that come with divorce, like child or spousal support. If you are required to provide support after your passing:

• A life insurance policy could secure payments for your dependents.
• Your estate plan will have to reflect any court-ordered financial commitments.

Update Your Trusts and Joint Assets

If you previously had family trusts or jointly owned property with your ex-spouse, restructuring and reviewing these arrangements to align with your new situation is recommended.

• Joint Tenancy vs. Tenants in Common – Jointly owned property with a right of survivorship may still pass to your ex-spouse if you do not change it.
• Trust beneficiaries – If your ex-spouse is named in a trust, consider if modifications are needed.

Don't Overlook Your Estate Plan: Take Action After Divorce

Divorce is as good a time as any to take a look at your estate plan and ensure things are set up to your liking. Not doing this, could lead to things not playing out to your desired outcome.

Are You Going Through a Divorce?

INB Family Law LLP has a team of dedicated professionals ready to walk you through whatever stage of the divorce process you may be in, or other family law matters entirely. Book a consultation today.