This case study shows the importance of keeping your will up to date and getting the right advice about structuring your estate planning.
Otherwise, you could disadvantage your kids – and give your ex-spouse a surprise cash injection.
Bob** died recently leaving three adult children behind: Alice, Brian and Chelsea.
Bob separated from his wife Carole (the mother of his three children) 20 years prior. Bob and Carole had done a family law property settlement through the Family Court but had never formally divorced.
Bob made a will shortly after separating from Carole giving of all of his assets to his three children.
In his will, Bob left his home to Alice, an investment property to Brian and money in a term deposit with NAB to Chelsea. When he made his will, he assumed that the document he was signing disposed of all of his assets to his children according to his wishes. A few years later, Bob decided to change banks because he could get a higher interest rate at the ANZ. He closed the term deposit with the NAB and moved his money to the ANZ.
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On Bob’s death, his ex-wife Carole inherited the money in the term deposit and Chelsea received nothing under the will.
How did this happen?
Because they had never gotten divorced, Carole was still legally Bob’s wife and eligible to inherit under the laws of intestacy. Because she is the mother of his children, Carole as the legal wife of Bob stands to inherit under Victoria’s laws of intestacy.
His will was poorly prepared and did not contain a “catch-all” provision (known as a residuary clause). Because there was no direction in Bob’s will as to who should receive the ANZ term deposit, it passed under intestacy to Carole.
Chelsea, the disappointed daughter, may be able to challenge the will or claim against the estate for a family provision claim. However, this has the effect of plunging the estate into litigation and diminishing the estate through higher legal costs, not to mention creating family conflict.
The case highlights the importance of keeping your will up-to-date.
A good rule of thumb is to review it every three years or when a major life event happens (such as marriage, divorce, the birth of a child, the death of a nominated executor or beneficiary, acquiring a new asset).
It also highlights the importance of getting your will done by a lawyer who specialises in estate planning so that you get the right advice about how to structure your estate planning.
*This article not intended to be legal advice. Individual circumstances vary and you should seek legal advice about your own individual circumstances from an estate planning lawyer.