Divorce brings with it a raft of legal and financial issues affecting matrimonial assets and wealth. While there are always exceptions, most couples aim for an amicable settlement so they may move on with their lives.
However, it’s the moving on which often includes re-partnering that can adversely affect family and individual wealth that needs to be addressed clearly and openly to ensure clarity and fairness in any future relationship.
I’ve written previously about later-life or grey divorce and the legal considerations attached to a lifetime of joint assets and wealth and how it may affect an individual, especially towards the end of their career.
For many older divorcees there simply isn’t enough working life left to rebuild wealth to its pre-divorce level.
Of course, divorce can happen at any stage of life and for high earning executives, professionals and business owners, the financial ramifications are likely to be significant.
It therefore makes sense to address individual wealth matters and legally clarify entitlements for each party in the relationship when re-partnering. If you don’t, you could find yourself again splitting your wealth, and the second time around (and later in life) it could be far more detrimental to your individual and family wealth circumstances.
Following are the common legal matters re-partnered couples should consider regarding their individual and/or joint wealth:
Most senior mining and resources executives have a substantial amount of money held in their superannuation account.
It is common for a super fund to have Binding Death Nominations which provide instructions for the fund trustee when you pass away. Typically, these instructions include indicating your beneficiaries along with the percentage of your super monies you wish to distribute to each of them.
Similarly, binding nominations can also apply to lump sum life insurance policy payouts.
It’s important to discuss how each of you intends to distribute your respective estates. This will include to one another and any children – your’s or your partner’s.
Keeping some, or all of both Estates separate (sometimes referred to as bloodline) needs to be discussed in a blended family situation because implementing such wishes will require careful thought and discussion.
By clearly articulating your wishes, it will help your advisers to craft an estate plan that suits your needs and reflects the past, present and future circumstances for you, your spouse and any children.
For mature couples with adult children, it may be a good idea to discuss these matters with them as well.
Notwithstanding your adult children being involved as Powers of Attorney and Executors, it is often best to express your wishes and expectations ahead of your demise to avoid any surprises. This can also be useful to gauge any discontent early, and if necessary, take further actions as required. This can be done formally in a Statement of Wishes and informally as part of a family discussion.
Further, if you work or have worked overseas in the past, there are additional Will and Estate Planning requirements you may need to address especially if you still own property overseas.
For example, if you work and reside overseas, you will need an International Will that will be recognised by countries that are signatories to the UNIDRIOT Convention.
Mining and resources executives who have executive shares schemes, will need to consider matters such as residency and asset protection structures, especially for shares that may have been awarded during an overseas secondment.
Failing to attend to these matters could result in grieving beneficiaries becoming caught up in costly, complex and protracted legal and tax matters involving foreign jurisdictions which could result in those closest to you being excluded altogether from receiving intended benefits.
How property is held, or is to be held, and if it is to form part of your Estate also needs to be addressed both for asset protection and for more practical or compassionate matters.
For example, a property owned by a deceased partner may be the principal residence of the surviving partner. If the property is bequeathed to someone else, a life interest or a right to reside may need to be created in the Will so your partner may continue living in the home until they no longer require it or they pass away themselves.
Trusts are often an effective means for deflecting unwarranted claims against your assets and estate. They also provide a vehicle for managing what can be significant tax matters aligned with distribution of wealth to beneficiaries.
Trusts may also be established for distributing funds for ongoing maintenance and care for minor children or beneficiaries who may be unable to manage their own financial affairs including those with disability, illness or addictions.
Similarly for business owners, consideration needs be given to the management and control of your business entities, should you become incapacitated or pass away.
Clear instructions should be available for succession, and these may include buy sell partnership agreements which indicate trigger events for invoking the agreement along with details for paying out the deceased partner’s share. Importantly, all this needs to be carefully, and legally documented, and reviewed from time to time to ensure it remains relevant to changing circumstances over a lifetime.
The first step for re-partnered couples is to talk to one another about the importance of clarifying what’s yours alone and what’s yours jointly. Then agree to legally formalise a plan that includes asset protection, estate planning and if you own a business, succession or buy sell arrangements.
If you have an existing Will and you marry or you’ve divorced, you’ll need to update it, then review it approximately every two years to accommodate any changing circumstances.
As is often the case in matters with greater levels of complexity, a collaborative approach that combines legal, financial planning and tax and accounting advice usually delivers the best possible outcomes for all involved.
Should you wish to discuss your pre-existing circumstances when re-partnering and our collaborative approach, please contact Robert Lamb in 3220 1144 or email.
To learn more about Robert, visit this link.
This article was originally published in Resources Unearthed. Resources Unearthed is a solutions hub that provides integrated financial, legal, property and accounting & business advisory services for executives, professionals and business owners in the mining and resources sectors.
The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute legal advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek legal or other professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.