Estate Planning While Your Divorce is Pending

As someone who has been through a divorce, I can attest that divorce is not easy. It is emotionally difficult and time consuming, since you have a lot to do and many decisions to make. Here are some helpful tips from an estate planning lawyer with first hand experience. For starters, most people don’t realize that if you die while the divorce is pending, the family court loses its jurisdiction over the assets and probate court treats the parties as if they are still married. According to intestate succession, your spouse will inherit all of your property, or one half or one third of your property, depending upon whether the you’re survived by children or other relatives. These steps will help you retain as much control as possible over your assets in the event you become incapacitated or die prior to the divorce being finalized:

1. Designate a new Health Care Proxy and Power of Attorney: If you are in an accident and become incapacitated during your divorce, your Health Care Proxy and Power of Attorney will make decisions for you. In most circumstances, you do not want your current spouse to make health care decisions for you or have access and control to all of your accounts and assets while you are incapacitated. During a divorce in California, you can modify a durable power of attorney and a health care directive, without notice or without written consent from the other party. This will also avoid unnecessary motions during your divorce proceeding if you are no longer of sound mind to continue representing your own interests in the litigation.

2. Familiarize yourself with the Standard (Automatic) Temporary Restraining Orders (“ATROs”): Upon the filing of a divorce in the state of California, ATROs are placed into effect immediately. They are financial restraining orders that prevent a party from transferring, encumbering, hypothecating, concealing or in any way disposing of any real or personal property, irrespective of characterization, without the written consent of the other party or court order until the final dissolution is entered. If violated, a party can face a contempt action with the aggrieved party entitled to potential restitution and attorneys fees. 

3. Revoke any existing will and trust: The ATROs have certain exceptions that allow a party to 1) create, modify, or revoke a will; and 2) revoke a non-probate transfer, pursuant to the instrument with notice filed and served on the other party. Accordingly, you may be able to revoke a trust with notice to your spouse if the revocation clause language in the existing trust instrument provides for revocation by one of you alone. It is important to look to the language of a revocable trust in determining whether it is advisable or possible to amend or revoke a trust. The trust language may state that both parties must consent to revocation or modification. As such, you may be forced to seek the court’s assistance if your spouse refuses to revoke a trust. Revoking it won't remove the property from the marital estate – if they’re community assets, they're still divisible in your divorce proceedings – but you can at least protect your half of community property and your separate property by voiding the existing trust if you named your spouse beneficiary of these assets. 

4. Create a new will and trust: The ATROs prevent a spouse from modifying or amending a non-probate transfer (i.e., an instrument other than a will that transfers property on death, including revocable living trusts and pay on death accounts). After you’ve revoked the trust, by agreement of the other party or court order, you could get permission to create new trusts and transfer assets into those trusts to avoid probate. ATROs are boilerplate provisions and if the facts in a matter do not fit these guidelines, it may be prudent to seek the court’s intervention since the court has the inherent power to modify an injunction. If this is not possible, at least you should revoke your old will and create a new “pour over” will during the proceeding. This allows any assets to pour over into the unfunded trust upon death. Although the assets will still need to go through the probate process if you die before the divorce is final, at least you will have your estate bequeathed to your newly desired beneficiaries, under the control of your newly designated executor.

5. revisit your plan and change the beneficiary designations on your retirement plans and life insurance policies once your divorce is finalized: Estate planning during divorce is often a temporary measure. Once the divorce is finalized, you must revisit your estate plan and see what needs to be updated in light of the divorce. Also, do not overlook those beneficiary designations. I often come across estates of people who die never having updated their beneficiary designations. The ATROs prevent you from changing the beneficiary on your retirement plans and life insurance policies without your spouse’s consent until your divorce is final. Once it is final, if you fail to change the beneficiary, your ex-spouse will receive the proceeds because these designations will override the terms of your divorce decree or even your will. 

6. How do I begin the estate planning process? Contact an experienced estate planning attorney and make sure he or she knows that you are anticipating or are in the middle of a divorce. Make sure the estate planning attorney is knowledgeable about the restrictions in place during a divorce before hiring them. Finally, it's important to authorize both your family law and estate planning attorney to communicate with each other about your case and share important documents and information to efficiently and cooperatively work together to help you achieve your goals.    

As someone who was both a plaintiff in a divorce proceeding and an estate planning attorney, I am experienced and knowledgeable about the benefits and limits of estate planning during the divorce process. I work collaboratively and economically with family law attorneys to share information that ensures you and your assets are protected during the divorce proceedings.