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Divorce and Trusts & Estates
You are encouraged to thoughtfully consider your estate planning during and after your divorce, to ensure that the well-being of your restructured family is accurately and legally in place.
Feel free to contact your collaboratively-trained divorce attorney to discuss how these estate planning issues may specifically affect you now, during and after your divorce, and to address current and future legal concerns, with your family's best interests in mind.
Automatic Temporary Restraining Orders (“ATROs”)
Everyone who files for divorce in California is subject to what are called “Automatic Temporary Restraining Orders.” They are set forth in California Family Code §2040 and are printed on the documents you signed when you or your partner filed for divorce. The ATROs are legally effective the moment you file for divorce or are legally “served” by your spouse, and they remain in place until all your divorce issues are resolved.
A primary purpose of the ATROs is to maintain the status quo to protect both spouses and their children, while the division of marital assets is in progress. There are many restrictions, and a few are listed below. For example, you may not do the following without either your spouse’s written consent or a court order:
- Take a minor child out of the state;
- Change your existing health and life insurance beneficiary designations;
- Dispose of or transfer most property other than in the usual course of business or for the necessities of life;
- Revoke existing trusts without notice to your spouse; and
- Transfer assets to trustees of new trusts.
The ATROs protect you both – they prohibit you and your spouse, for example, from your selling your Porsche to your brother for a dollar, making your new love-interest the beneficiary of your estate, using your kids’ trusts to pay for your part of the divorce (without your spouse’s permission), etc.
Changing Your Estate Plan After Filing &
Before Your Divorce Is Finalized
Please review the chart “Divorce-Estate Planning Chart”. The chart summarizes how you may/may not change your estate plan while your divorce is in progress and not yet finalized.
Among other things, the ATROs dictate the changes you may make legally to your estate plans on your own, which changes legally require notice to your spouse, which changes legally require your spouse’s consent, and which changes can be made only with a court order.
If you decide to make any changes to your estate plan, or to create an estate plan for the first time, it is critical to work closely with your collaborative divorce professionals and your Collaborative T & E Attorney to ensure you attain your estate-planning goals, without violating the ATROs.
Bridge Estate Plans
You may wish to consider whether your family needs a “Bridge Estate Plan.” A Bridge Estate Plan spans the time period from filing for divorce until, either the divorce is final, or you change your existing estate plan, depending on your circumstances. The period between filing for divorce and the final divorce decree is often much longer than most people expect.
Life continues while a divorce is pending, and unfortunately, it is not uncommon for one spouse to become incapacitated or die before a divorce is final. Depending on your individual circumstances, a Bridge Estate Plan may provide critical protection for you, your former spouse, your children and other dependents during a divorce. Please raise this issue with your mediating or collaborative divorce attorney to understand whether it's wise to hire a collaborative trust attorney to put a Bridge Plan in place.
Death During Divorce
If you or your spouse dies while a divorce is in process, your accounts and property are distributed as if the divorce had never been filed, because you are still legally married.
If you’re still legally married when you die during a divorce, without an estate plan, including a will and trust, all of your property, accounts, etc. are typically distributed according to California laws governing these matters – and not according to your desires.
Death When a Status-Only Judgment
Has Ended Your Marital Status
(But Other Divorce Matters Are Not Yet Resolved)
In some cases, both spouses agree to a Status-Only Judgment. This means that you both agreed to end your marriage legally, before your divorce matters are entirely settled. For example, a spouse may request a Status-Only Judgment in order to remarry, while the distribution of assets and debts remains to be addressed. You can still be negotiating property distribution or spousal and child support, while no longer being legally married.
A Status-Only Judgment legally ends your marriage, so it automatically also ends your legal benefits as a spouse. Consequently, a Status-Only Judgment can dramatically change who is considered the legal owner of your community property, and who may be legally considered a pay-on-death beneficiary for all your accounts. If one of you dies before all the divorce issues are finalized, a Status-Only Judgment poses a variety of legal, tax and estate planning landmines. Property and accounts that may be affected include:
- Retirement accounts,
- Ownership of your home/other real estate,
- Any gifts you made in your existing estate plan to your spouse,
- Your advanced health care directives, HIPAA waivers and more.
For such reasons and before you request/agree to a Status-Only Judgment, it is extremely important to work closely with an experienced, T & E attorney to understand any negative consequences for you of a Status-Only Judgment.
Powers of Attorney for Finances & Health Care
Many estate plans include various “Powers of Attorney,” notarized documents that grant someone (other than the person in question) legal authority to act on that person's behalf. For example, in the event a trust-maker is incapacitated, Powers of Attorney prepared in advance can designate who will manage the trust-maker's finances and health care. It is critical to consult with your estate planning attorney to understand and address concerns about how Powers of Attorney may be affected by your pending and/or final divorce.
Because these trust and estate planning documents are typically custom-crafted by a T & E attorney, that attorney is best positioned to advise you about how your divorce impacts your existing estate plan. In addition, your T & E Attorney may advise you, given the onset of a divorce, to sign new Powers of Attorney to reflect your current wishes and to protect yourself, your spouse and your loved ones.