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What Happens to My Estate Plan if I Get a Divorce?

by Sep 11, 2019ESTATE PLANNING

When life changes, it is important to remember to get your estate planning documents updated.  A divorce is no exception to this rule.  The marital settlement agreement, which is required to finalize a divorce in California, will generally void most joint living trusts and wills between spouses.

Because this can have severe consequences, California specifically warns all divorcing parties on California Judicial Court Form FL-100.  This petition, which is required to initiate a divorce or annulment proceeding, includes the following language on page 3:

“NOTICE—CANCELLATION OF RIGHTS: Dissolution or legal separation may automatically cancel the rights of a domestic partner or spouse under the other domestic partner’s or spouse’s will, trust, retirement plan, power of attorney, pay-on-death bank account, survivorship rights to any property owned in joint tenancy, and any other similar thing. It does not automatically cancel the right of a domestic partner or spouse as beneficiary of the other partner’s or spouse’s life insurance policy. You should review these matters, as well as any credit cards, other credit accounts, insurance policies, retirement plans, and credit reports, to determine whether they should be changed or whether you should take any other actions. Some changes may require the agreement of your partner or spouse or a court order. “

While your entire estate plan likely won’t be invalidated, any clause providing power or property to you or your spouse will be void, leaving significant holes in your plan.  For example, California Probate Code Section 6122, states that “unless a will provides otherwise, a divorce or annulment will automatically revoke:

(1) Any disposition or appointment of property made by the will to the former spouse.

(2) Any provision of the will conferring a general or special power of appointment on the former spouse.

(3) Any provision of the will nominating the former spouse as executor, trustee, conservator, or guardian.

While this law specifically mentions a will, courts have applied the restriction across all estate planning documents, including Living Trusts, Power of Attorneys, and Medical Directives. This means that a trust naming spouses as co-trustees will be invalidated. Similarly, any decision-making or fiduciary powers granted to a spouse in any estate planning document will be void.

In order to avoid unwanted repercussions, it is important to update your estate planning documents either before initiating or immediately after finalizing your divorce. The court mandates that all assets be frozen during divorce proceeding, so you generally cannot amend your estate plan or transfer property to a new trust during the divorce process. Specifically, California Family Code 2040 requires that both spouses refrain from:

“transferring, encumbering, hypothecating, concealing, or in any way disposing of any property, real or personal, whether community, quasi-community, or separate, without the written consent of the other party or an order of the court, except in the usual course of business or for the necessities of life…”

Estate planning is intertwined with both California Probate and Family Codes in the divorce context, so it is important to understand your rights and obligations before making any changes. If you are recently divorced or contemplating a change in marital status, speak to an estate planning attorney about the options available to keep your interests protected throughout the process.