Getting Divorced? Have You Reviewed Your Estate-Planning Documents?
Divorce has become a reality for many couples, and for most, the details of dividing property, developing a parenting planand helping their kids adjust to what will be a new family situation are consuming. There are often additional challenges, including selling the family home, packing, moving to a new neighborhood and enrolling in a new school. With these kinds of pressures, it’s not surprising that people aren’t thinking about their Living Trusts and other estate-planning documents at times like this. But failing to update these documents to reflect the changes in your life can have significant long-term consequences.
California: A community property state
According to California’s community property law, upon divorce, each party is entitled to half of all property accumulated during the marriage, and each spouse is entitled to retain control and ownership of separate property.
Once divorced, most estate-planning documents are legally nullified, yet that nullification can be enforced only if an estate is submitted to Probate.
While the divorce is pending, those documents remain in force unless legally modified.
If one party dies before a divorce is granted, the courts may treat the parties as if they are still married, depending on the stage of the divorce proceedings when the death occurred.
Temporary restraining order prevents disposing of property without spousal consent
When someone files for Divorce in California, the court issues an automatic temporary restraining order (ATRO). This order prevents either party from disposing of any property–whether community, marital, or separate–without written notice to the other party. If that order is ignored, the offending party may be assessed attorney’s fees and be ordered to provide full restitution. However, nothing prevents making changes to appointments and bequests in estate-planning documents. So if one spouse were to sell or redistribute a property without notifying the other spouse, there would be consequences, but changing the way that property will be distributed in a Living Trust is legal.
Divorce clients: Strongly consider reviewing your estate-planning documents
Because of the document nullification issue, it may be in the best interest of Divorce clients to review their Wills, Living Trusts, Powers of Attorney and Advanced Health Care Directives. It may be time to revoke your Joint Trust and create new individual Trusts. Appointing new representatives and adjusting bequests ensures that intent is clear and will not be subjected to legal challenge. Failure to adjust bequests can raise the question of whether someone actually intended to benefit an ex-spouse. Documents that are revised and executed after a Divorce assure that the issue has been addressed.