How separation can impact your estate planning: Part 2 – Married couples in NSW

February 13, 2022

In part 2 of our series on the intersection of family law and estate planning, we discuss the impact (or lack thereof) that separation and divorce have on your estate planning documents in NSW.  Click here to read part 1 of our series which covered Married Couples in Qld.

Estate planning documents in NSW

In NSW, an enduring power of attorney (EPOA) document allows you to appoint attorney/s to make financial decisions and/or legal decisions on your behalf during your lifetime   In contrast to Queensland, you cannot use an EPOA to appoint someone to make decisions about your health.  To do so, you will need to make an appointment of enduring guardian (AOEG) – this is an entirely separate document to your EPOA.  An AOEG allows you to appoint guardian/s to make health decisions on your behalf in the event you lose capacity.

Your EPOA, AOEG and will make up your key estate planning documents in NSW.

Effect of separation and divorce on the validity of your estate planning documents

In NSW, separating from and divorcing your spouse does not have any impact on the validity of your EPOA and AOEG.  Those documents will continue to have the same effect even after a divorce order has been issued by the Court.

This is very different to the position in Queensland (as highlighted in our last bulletin) where divorce has the effect of revoking any provision in your EPOA which appoints your spouse as your attorney.

However, in NSW, divorcing your spouse does revoke the terms of your will, so far as any gift you have given to them or their appointment to any role (i.e. their appointment as your executor, guardian or trustee will be revoked).  Importantly, if you have appointed your spouse as trustee for assets given to your children, then this provision in your will is not revoked if you divorce.

Separation from your spouse has no impact on your will.  Your will continues to have the same effect as if you are still legally married.

We cannot stress enough the importance of updating your estate planning documents as soon as possible after you have separated.

What if you die without a will whilst still married (but separated)?

If you live in NSW, die without a will, and are married (with or without children) at the time of your death (and your spouse is the parent of those children), then the rules of intestacy provides that your estate will pass to your spouse only.  This means that if you are married but separated, then your ex-spouse will take the whole of your estate even if you have children.  They will also have the standing to bring a claim for further provision from your estate.

If you are married at the time of your death but have children from a previous relationship, then your estate is divided as follows:

1. Your personal effects, a statutory legacy (i.e. a gift) of $482,000 (this amount is adjusted annually in line with the CPI) and half of the remainder of your estate to your spouse;
2. The remaining 50% of your estate is divided equally between your children (whether they are children from a previous relationship/s and/or from your relationship with your spouse).

If your estate does not cover the statutory legacy amount (i.e. the value of your estate is less than $482,000) then your entire estate will go to your spouse.

Look out for our next bulletin where we discuss the rules for de facto couples in Queensland and NSW.

For more information please contact a member of our estate planning team at Fox and Thomas.