The news broke yesterday that Microsoft co-founder Bill Gates and wife Melinda Gates have officially filed for divorce. Whilst divorce may feel like the loss of a loved one, death and divorce are life events that intertwine in ways beyond the emotional - your estate planning. As an estate planning lawyer at Tindall Gask Bentley Lawyers, when I read or hear about divorces in the media, my mind immediately turns to the repercussions and complexities divorce has on estate planning. Unfortunately, it is often overlooked. This billion-dollar divorce is a timely reminder to ensure your estate planning is up to date.
The news broke yesterday that Microsoft co-founder Bill Gates and wife Melinda Gates have officially filed for divorce.
Whilst divorce may feel like the loss of a loved one, death and divorce are life events that intertwine in ways beyond the emotional – your estate planning.
As an estate planning lawyer at Tindall Gask Bentley Lawyers, when I read or hear about divorces in the media, my mind immediately turns to the repercussions and complexities divorce has on estate planning. Unfortunately, it is often overlooked.
This billion-dollar divorce is a timely reminder to ensure your estate planning is up to date.
Below are some of the different scenarios Bill and Melinda would be confronted with were they fortunate enough to live in South Australia.
I am now formally divorced: what happens to my will if I die before updating it?
There are laws which stipulate what happens to the provisions in your will if you are formally divorced, but then die prior to updating will.
Essentially, divorce treats your former spouse as if they had died on the day the formal divorce order was made.
For example, if Melinda Gates’ will has the following gift:
“I give my house to my husband Bill Gates if he shall survive me, otherwise to my children, Rory Gates, Phoebe Gates and Jennifer Gates”
The divorce would mean that Bill would be treated as dying before Melinda and the gift of the house would pass to Melinda’s children, Rory, Phoebe and Jennifer Gates.
Whilst on the outset the above may appear to be a favorable outcome to Melinda, some of the assets and situations the above outcome might not be suitable for are:
- Underage beneficiaries;
- Blended families;
- Jointly owned assets;
- Asset protections;
- Step-children or ex-partners family members being included.
What happens to my estate if I die before my divorce is finalised and I don’t update my will?
Bill and Melinda have announced their divorce, and with an asset pool of their magnitude, I am sure it will take many months, if not years, for their divorce to be formalised.
If Melinda dies before her divorce from Bill is finalised, her estate will be distributed in accordance with her last will, which would likely give all of her assets to Bill. This will be the case even if Melinda or Bill have moved out of the family mansion and have started Court proceedings.
Using the above example, if Melinda’s will says:
“I give my estate to my husband Bill Gates if he shall survive me, otherwise to my children, Rory Gates, Phoebe Gates and Jennifer Gates”
Then the estate will be given to Bill, regardless of what Melinda’s wishes or intentions are.
This could mean that her (almost) ex-husband Bill would receive the entirety of her estate.
It could also mean that Bill, Melinda’s almost ex-husband, may receive a large portion of her superannuation, too.
We had a client who had been separated from his wife for ten years. This client had finalised a property settlement through the Family Court, but was never formally divorced. This client’s wife died suddenly, and her entire estate, including her superannuation, went to our client. It is clear that this is not what his wife would have wanted and had she just put a will in place the outcome would have been very different.
What happens to my estate if I re-marry?
Unlike divorce, a new marriage completely revokes an existing will, unless it is drafted in contemplation of that new marriage.
Let’s say that a few years after Melinda has divorced Bill, she meets Shane Warne at a charity gala. Melinda and Shane fall in love and marry in a lowkey ceremony on a sprawling estate in the Adelaide Hills.
Assuming Melinda does not update her estate planning, she will die with no will. This means Melinda will die intestate.
The consequences of dying intestate are that the government will decide where Melinda’s assets go. Her estate will be shared between Shane and her children, or grandchildren, in varying amounts. If there are beneficiaries under the age of 18, their entitlements will be held on trust by the Public Trustee.
Shane will be in charge of Melinda’s estate as her spouse, which could be upsetting for her children.
It is unlikely that Melinda, Shane and her loved ones, would be happy with this outcome.
Death, and to a lesser extent, divorce, are often out of our control.
What is in our control is ensuring that our estate planning is up to date.
Estate planning is a highly specialised area of law, which requires careful consideration for your specific needs and circumstances: there is no one size fits all.
Even if you are in the early stages of your separation, it is important to get the right advice on where your assets would go in the event of your passing.
Ensuring your estate planning is up to date at the earliest opportunity provides your loved ones with certainty and peace of mind.
Please contact us if you think that your estate planning needs reviewing. It could mean the world to the loved ones you leave behind.