California Estate Planning After Divorce

Estate planning after divorce is an often overlooked priority. If you have a will, trust, power of attorney, health care directive in place, now is a good time to update them.  Obviously, these documents probably named your ex-spouse as a beneficiary of your estate as well as agent to act on your behalf.  Generally, dissolution or annulment of a marriage revokes any gifts to a former spouse or domestic partner and revokes any nominations as executor, trustee, conservator, or guardian as well (Ca. Probate Code Section 6122).  Also, if your spouse is your agent and you divorce, his/her authority automatically terminates. If you remarry the same person, though, the powers are re-instated (Ca Probate Code Section 4154).

However, even though the law provides you some protection, it also leaves you without a plan.  If all your previous designations are revoked, who steps in?  It is your responsibility to provide new beneficiaries, a new agent, a new guardian or conservator, a new executor or trustee.   Your estate plan should be updated so that your wishes are memorialized and complete.  At a minimum, you should make sure that your beneficiary designations for asset transfers are updated accordingly after your divorce is final.  Beneficiary designations for assets such as life insurance policies, pay on death accounts including bank accounts, pension plans, 401(k) accounts, stocks, and trading accounts should all be updated. These are assets that will be transfered outside of your will, based on who you name as beneficiary so if you update your will but not these designations, you haven’t covered all your bases.  Also if you held any real property with your ex-spouse in joint tenancy with rights of survivorship, make sure title is changed according to who gets the property in your divorce decree. 

If you forget, all is not lost because under Ca. Probate Code sections 5600-5604,  if a spouse or domestic partner was named as the beneficiary on pay on death accounts, in a living trust, or by joint tenancy title, those transfers will fail if at the time of the transferor’s death, the person named as beneficiary is no longer the surviving spouse or domestic partner because the couple divorced or terminated the partnership.   However, this law does not cover life insurance beneficiary designations or employer-sponsored 401(k) accounts, pension plans, or employer-provided life insurance policies.  So it is best to be proactive to PREVENT future problems and change your designations as soon as you can.