UK: Until Death Or Divorce Do Us Part - The Effect Of Divorce On A Will

Divorce and your Will

In the course of a divorce or dissolution of a civil partnership attentions are quite rightly focused on the lives that each party will lead once the separation has been finalised. However, both those with and without Wills need to consider their testamentary arrangements when it becomes clear that a relationship has broken down and is heading for divorce. Unlike a marriage, a divorce does not automatically revoke the entirety of a Will and there are a number of aspects to a Will which will be affected by the termination of a relationship.

Taking a look at some of the most important points to consider:

Gifts to spouses

As a general starting point, the Wills Act 1837 provides that upon a divorce a testator's former spouse will be deemed to have died on the date when the dissolution or annulment of a marriage or civil partnership occurred. As a result gifts to spouses in Wills will not take effect after that date, but there is the risk that before decree absolute such gifts will still take effect when the testator might not want them to.

Equally, prior to decree absolute people without a Will risk their spouse benefitting (albeit unintentionally) under the intestacy rules. Where an estate is under £250,000 a surviving spouse will inherit the entirety. For larger estates a spouse will broadly be entitled to everything if the deceased left no children, but if the deceased is survived by their offspring and a spouse, the spouse will receive the first £250,000 and a life interest in the rest, with the remainder passing on trust for the children when they reach 18.

Finally, a Will that appoints an estate entirely to a former spouse with no substitute provisions may well result in an intestacy, with a subsequent distribution of assets under the intestacy rules which the testator may not have wanted.

Appointment of Executors and Trustees

It is usual for Wills made by couples to appoint each other both as executors and trustees of any trusts in the Wills. A testator often appoints a spouse alongside another person (frequently a solicitor or accountant) to ensure that interests for a range of family members are represented. Once a decree absolute has been granted then the appointment of the former spouse will not be effective. Executing a new Will enables a fresh choice of executors, and the testator will be able to choose people he trusts and knows will administer his estate in accordance with his wishes.

Guardianships

Couples with young children often express in their Wills who should act as guardians of those children in the event of their deaths. This is one area where the Wills Act will not operate to revoke the appointment of the guardians, and thought should be given to whether there are more suitable people who could take on the role. On the death of the first parent the child's surviving parent will take custody, but upon the second parent's death a guardian will be required if the child is still a minor. Although there is the possibility that divorced parents' choices of guardians will differ and the appointment may need to be decided by the courts, an appointment in a testator's Will is very useful in deciding that question.

Codicils

A note of caution needs to be sounded where codicils are used to amend Wills that have been executed prior to a divorce. A codicil effectively republishes the Will it is amending, so notwithstanding that the Wills Act may have removed a former spouse as an executor, executing a codicil to a Will which has such a person named can reinstate them to their former role. When the time came to administer the estate it would be necessary to show that this was not the testator's intention, which may not be an easy task.

Inheritance Tax considerations

Transfers of assets between UK-domiciled spouses that take place during a lifetime or under a Will are free from Inheritance Tax. Testamentary arrangements that are put in place between couples are usually designed to take advantage of these provisions, but the availability of the relief falls away upon a divorce.

Furthermore, Wills that have been put in place since October 2007 may have been prepared in order to take advantage of the transferable IHT Nil Rate Band. The IHT Nil Rate Band is the amount that an individual can transfer during their lifetime and under their Will free of IHT (currently £325,000). Since 7 October 2007 any amount of the Nil Rate Band that remains unused after the death of the first spouse can be claimed by the second spouse to be used against their own estate. The chance to claim the unused IHT Nil Rate Band will evaporate upon divorce, and as a result an individual's testamentary arrangements may no longer be as tax-efficient as they might be.

Conclusion

Wills are an aspect of people's affairs that are easily overlooked in the stress and acrimony of a divorce, but the possible consequences of doing this can be both financially and emotionally costly. Preparing a new Will offers a chance to start afresh and to ensure that your estate passes to those you wish to receive it without unnecessary Inheritance Tax charges, and we would urge people to see a review of their Will as a crucial part of the divorce process.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.