Modifying Your Estate Plan During a Divorce

Divorce can be a complicated and frustrating process. Modifying your estate plan while going through a divorce can complicate things even further, especially if your estate plan is not up to date. It is important to ensure your estate plan is up to date when you are divorcing, because your spouse could inherit under your will or life insurance policy, should you pass away while your divorce is pending and fail to remove your ex-spouse as a beneficiary.

There are certain rules in California that make it tricky to modify your estate plan while going through a divorce. First and foremost, when you start your divorce by filing the dissolution petition and serving your spouse with a summons, an Automatic Temporary Restraining Orders, or “ATROS,” goes into effect. The ATROS automatically impose four rules – by way of California Family Code Section 2040 – that limit a spouse’s ability to change his or her estate plan.

1. No changing beneficiaries on insurance policies. In order to prevent a spouse or their children from being harmed due to any changes in insurance, ATROS prevents any spouse from cashing, borrowing against, cancelling, transferring, disposing of, or changing the beneficiaries of any insurance or other coverage including life, health, auto, or disability, held for the benefit of the spouses and their children for whom support may be ordered.
2. No changing beneficiaries on non-probate assets. Unless a spouse can get prior written consent from their soon-to-be ex or a court order, ATROS prevents a spouse from (1) transferring any property, real or personal (with some exceptions); and (2) from changing the death beneficiaries named on any nonprobate asset. Examples of nonprobate assets are retirement plans, revocable living trusts, and annuities.
3. Severing joint tenancies. Although the first two rules imposed by ATROS restrict your ability to make many changes during divorce, ATROS does permit some modifications to jointly held assets. For example, ATROS still allows each spouse to revoke a revocable living trust, or other nonprobate transfer, and also to sever a joint tenancy, provided that notice of any such change is filed with the court and is served on the other spouse before the change takes effect. Should a joint tenancy remain in effect, one spouse would inherit the entire joint tenancy upon the death of the other.
4. Creating wills and unfunded living trusts. The last rule imposed by ATROS permits each spouse to unilaterally create, modify, or revoke a will; create an unfunded revocable or irrevocable trust; and otherwise modify a nonprobate transfer in a manner that does not affect the disposition of the property. One example would be changing the designated successor trustee of an existing trust.

The four rules imposed by ATROS are not the only restrictions that may be placed on jointly held assets during a dissolution. If you are considering modifying your estate plan while going through a divorce, contact us. Our team can help you identify how to modify your estate plan without violating ATROS.

For more information or to schedule an appointment, click the button below, or call us at (619) 289-7948. We look forward to helping you.