By Brooks J. Hollister, J.D.
This article is the first in a three-part series regarding estate planning during and following divorce. Next week Mr. Hollister will address updating your estate plan once the divorce is final.
When you file for divorce, a regularly overlooked aspect is the need to update an estate plan. Failing to do so can have a significant impact on it, particularly if there are provisions in your will or trust that involve your soon to be ex-spouse.
In California, the state puts some restrictions on updating an existing will or trust during the divorce process. The rules are designed to ensure that spouses don’t transfer assets that are part of the community estate. In other states, when you file for divorce, any provisions in your will that benefit your spouse are automatically revoked. This means that if you were to pass away before the divorce is finalized, your spouse would not inherit under your will. In California, however, the law does not revoke the appointment of separate property or gifts to the former spouse until the divorce is finalized.
Some actions one can take immediately after filing for divorce are:
- Execute, update or revoke your will
- Edit any Powers of Attorney or Advance Health Care Directives
- Update your named guardian for any children who are minors
- Review any Prenuptial Agreement
- Refamiliarize yourself with your life insurance policy
Additionally, if you have named your spouse as the executor of your estate or as a beneficiary of your life insurance policy or retirement accounts, those designations may also be affected by divorce. It’s important to review and update each of your estate planning documents when you file for divorce to ensure that they reflect your current wishes. It is important to note, however, that you are prohibited from creating a new trust if your divorce is still pending. This is to stop spouses from attempting to hide assets that are part of the community estate.
Fortunately, in California there are protections in place for divorcing individuals who may have included their spouse in their will. Once final, the divorce will negate property or gifts to the former spouse that were included in a will while the couple was still married.
Another important consideration is how divorce can impact the distribution of your assets. In California, assets acquired during marriage are considered community property. This can include assets such as real estate, bank accounts, retirement accounts, and personal property, so long as they were acquired during the marriage. Community property is subject to division between the spouses during a divorce proceeding. Therefore, it is important to work with an experienced attorney to ensure that your estate plan takes into account any changes in your financial situation that may result from the divorce.
In addition to updating your will and other estate planning documents, you may also want to consider updating your power of attorney and healthcare proxy documents. Documents such as a will or an Advance Health Care Directive appoint someone to make financial and medical decisions on your behalf if you are unable to do so yourself. If you had previously appointed your spouse to serve in these roles, you may want to choose someone else during or following the divorce.
Overall, filing for divorce can have a significant impact on your estate plan. It is therefore important that you review and update your documents to ensure that they reflect your current wishes and financial situation. Failure to do so could result in unintended consequences and complications for your loved ones.
Brooks J. Hollister is an attorney at Carmel & Naccasha specializing in wills, trusts & estate planning as well as corporate and business transactions. If you have any questions about this article, or for further questions you may have regarding estate planning, please contact attorney Brooks Hollister at bhollister@carnaclaw.com or (805) 546-8785.
About Carmel & Naccasha
Founded in 2004, Carmel & Naccasha has offices in San Luis Obispo and Paso Robles. The firm’s lawyers focus their practice and provide exemplary client services in the areas of business transactions, real property, land use, commercial and employment litigation, trusts and estate planning, municipal law, and insurance coverage. For more information about Carmel & Naccasha, visit the website at www.carnaclaw.com
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