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Separating From Your Partner Means Changing Your Estate Plans

You and your common-law partner were together for decades. Then your common-law partner suddenly dies. You claim the benefit from your partner’s life insurance policy and apply to transfer the monies from their RRSPs into yours.

Then the insurance company and financial advisors shock you. You aren’t the beneficiary of the life insurance policy or the RRSPs. Your common-law partner’s first spouse, who they’d left long ago, is still the beneficiary of both.

In Canada, it is legally possible for a person to have two spouses. Suppose A marries B,then separates from B but doesn’t divorce B. A is still married to B. If A later forms a common-law relationship with a third person, C, then C becomes their common-law spouse after they have been together for the time required by law.

Both of you believed that the act of separation automatically removed the previous spouse as beneficiary and put you in their place. Merely separating does not do this. After separating, common-law spouses must actively change their wills, beneficiary designations and other documents such as powers of attorney. Otherwise, previous spouses remain as beneficiaries under wills and life insurance, and assume decision-making power under a power of attorney if they are still so designated.

This is also true for divorced couples, except for wills. The law assumes that a divorced spouse predeceases a testator if that spouse is still named in the will.

Separating couples should change their wills and beneficiary designations immediately, even while the separation is happening. The changes should include:

  • Bequests to soon-to-be-ex-spouses should be removed from wills
  • Beneficiary designations in RRSPs, insurance policies and similar funds
  • Selecting another trustworthy person to act under powers of attorney

It’s difficult to think of these matters when going through a separation or divorce. But making these changes at that time can prevent difficulties later. Speak with an experienced family law or estates lawyer to assist you in making these changes.

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