Divorce can change all aspects of your life — it can also impact any existing estate plan you may have in place. If you are considering divorce, you should think about how ending your marriage will affect the wishes you may have outlined in your will, trusts you have created, and any powers of attorney you executed. In addition, if your spouse was named as a beneficiary on your life insurance policy, pension plan or retirement fund, it’s crucial to carefully review these documents after divorce to determine what changes should be made.
Once you know that divorce is imminent, you should consider modifying your estate plan. Although you may not be able to update every aspect of your estate plan until your divorce is finalized, California law permits you to make certain changes while divorce proceedings are ongoing. Significantly, one of the first things you should revise is any financial or healthcare power of attorney you have in place. Failure to do so can result in your soon-to-be former spouse being legally allowed to make medical or financial decisions on your behalf in the event you unexpectedly become incapacitated.
Complex divorces can take months, or even years, to complete. If you’re a party to an ongoing divorce, you are permitted to create a new will or revoke a prior one before the court issues the decree. If you pass away during the divorce proceedings before the final judgment is rendered, your spouse could inherit assets under any current will — even if this was not your intention. Importantly, while you might be able to draft a trust instrument, you likely won’t be able to fund it until the divorce is finalized.
Another thing you can’t do until after the divorce is remove your spouse as a beneficiary on your retirement account, pension plan, or life insurance policy. These are typically non-probate transfers. Such assets may also be considered community property subject to division in divorce. Any action taken during the divorce process to shift a spouse’s share of community property away from them without consent is prohibited under the Automatic Temporary Restraining Orders that become effective upon service of the summons.
Under California law, a divorce or annulment revokes any bequests made to your former spouse in your last will and testament. In other words, any provision that provides property or assets to your former spouse becomes null and void. While California law protects you in this regard once your divorce is finalized in the event you forget to update your will, it’s critical to understand that these laws do not apply before the divorce proceedings have concluded.
Unless the will expressly states otherwise, a dissolution of marriage revokes the following:
No other provisions in the will, except those addressing your former spouse, are affected by the outcome of a divorce. However, in some cases, a party to a divorce might wish to provide for their former spouse in their will — even after they have parted ways. It’s best to have the guidance of a skilled attorney who can assist you with drafting a provision that leaves a gift to an ex-spouse.
If a life insurance policy is in place that designates your ex-spouse as a beneficiary, they will not automatically be removed upon the finalization of your divorce. Notably, a beneficiary designation will remain intact unless the divorce decree specifies otherwise, or the policy holder changes the beneficiary after divorce. The policyholder’s intention is irrelevant — a court will usually not evaluate evidence to support the contrary or verbal promises. Rather, it will assume that the policyholder would have changed the beneficiary on their policy if they wished to do so.
In the event of divorce, your spouse is typically entitled to half of the community property portion of your retirement plan under California law. Neglecting to change the beneficiary after divorce on a retirement plan could result in them receiving all the assets it contains when you pass away. It’s essential not to assume that a divorce decree overrides a beneficiary designation. You will need to make the necessary changes to these documents to avoid any unwanted consequences.
If you’re contemplating divorce, it’s vital to consider the impact on your estate plan. A skilled attorney who handles divorce and trusts and estates matters can advise you regarding your options and the best course of action for your specific situation. With over 20 years of experience, the Law Offices of Rick D. Banks assists clients throughout Fresno and the surrounding area with divorce and estate planning. To schedule a no obligation consultation, call (559)222-4891.