HOW TO HANDLE AN ESTATE PLAN IN A DIVORCE

By Christen E. Bourne, Attorney at Law

What does divorce have to do with estate planning? Quite a lot, as it turns out.

It is estimated that between 42% and 45% of marriages in the United States will end in divorce.[1] In California, the divorce rate is even higher—approximately 10% above the national average.[2] Not only is divorce emotionally wrenching, it is also fraught with legal complexities—with nuances you may not even be aware of. If divorce is on the horizon for you, it is important to understand the impact of divorce on estate plans. This is something many people have probably never thought about.

Divorce Proceedings and Estate Plans: Why You Should Make Updates Before Filing

So what happens to an estate plan in a divorce? As you know, divorce proceedings can be a long, arduous process, taking years to complete. With that in mind, existing estate plans and the laws of intestacy (related to dying without a will) remain in effect during the divorce proceeding. If you are facing a potential divorce, you should seriously consider updating your estate plan before you file. That way, your estate plan accurately reflects your intent and avoids any unwarranted bequests during divorce proceedings. ​

There are good reasons to do so. Here is one possible scenario. Let’s say you pass away while your divorce is pending. In that event, death supersedes the divorce as the act that legally dissolves your marriage in California.[3] As a result, your spouse retains all rights to inherit from your estate, even though that may not have been your intention.[4] 

As you can see, if you or your spouse do not update your estate plans prior to or during the dissolution of marriage, there could be unintended consequences. The surviving spouse may have a right to inheritance despite being in the midst of divorce proceedings. To avoid this, you should consult with your estate planning attorney before filing for divorce.

Estate Plans and Divorce During Proceedings: Restrictions You Need to Know About

What if you are in the middle of proceedings? In this case, the actions you can take with respect to your estate plans are more limited. There are legal reasons for this. When the petition for dissolution of your marriage is filed and the petition and summons are served, an automatic temporary restraining order (ATRO) is imposed against divorcing parties until the final judgment is entered.[5] The purpose of the ATRO is to maintain the status quo until your divorce is finalized. The rationale behind this is that it prevents the parties from taking actions that might affect ownership interest of property. [6]

The ATRO also prevents the parties from creating or modifying non-probate transfers (transferring or distributing assets to beneficiaries without the formal court process known as probate), affecting the disposition of the property. Essentially, that means that once the ATRO is in effect, the parties cannot make changes to pay-on-death accounts, transfer-on-death securities, and transfer-on-death deeds, nor can they modify, create and/or fund a trust. ​

However, because the ATRO does not affect transfers subject to probate, both parties can still create, modify, and revoke a will.[7] Accordingly, with the help of an estate planning attorney, you can still amend your estate planning documents, so it is worthwhile to find out what your options are.

Reach Out to Us for Assistance With Estate Planning and Divorce

If you do have any questions or concerns, the experienced attorneys at Rusconi Foster Law Firm will provide guidance on how to handle your estate in a divorce. Contact us today: by phone at 408-779-2106 or email at [email protected].

References

[1] https://www.psychologytoday.com/us/blog/living-single/201702/what-is-the-divorce-rate-really
[2] https://www.michaelagardner.net/blog/2018/10/09/divorce-statistics-in-the-united-193973
[3] Cal. Fam. Code § 310 and In re Marriage of Williams, 101 Cal. App. 3d 507 (1980)
[4] Estate Planning and Divorce (CA), Practical Law Practice Note w-001-3996
[5] Cal. Fam. Code § 233
[6] Cal. Fam. Code § 2040(a)
​[7] Cal. Fam. Code § 2040(b)