In California, divorce may legally affect many of your estate planning documents, such as wills, trusts and medical directives. Property distribution under community property law may also affect how estate assets, such as those in living trusts, are split. In order to make sure that your estate planning documents accurately reflect your wishes, you should revise your estate documents after divorce.
Community Property Rules
California follows the community property system of property distribution in a divorce. When spouses divorce in California, they divide their marital property equally, but each spouse gets to keep his own separate property. A spouse's separate property is everything she owned before getting married, as well as any gifts or bequests she personally received during the marriage. Everything earned during the marriage, as well as gifts given jointly to both spouses, is marital property and divided equally in half.
Estate Planning Documents
By the time of divorce, many spouses have created an estate plan: a set of documents that describe what will happen to their property and themselves if they become physically or mentally incapacitated or when they die. These may include wills, living trusts, testamentary trusts, medical directives, life insurance policies and powers of attorney. Upon divorce, California law automatically revokes, or invalidates, any part of your will that grants property to your ex-spouse and gives the property to another beneficiary. However, several California court cases have ruled that divorce will also revoke any provisions in your will pertaining to the children of your former spouse. Therefore, upon divorce, it's a good idea to update your estate documents to reflect your new intentions toward both your spouse and stepchildren.
Pensions and Retirement
Retirement plans and pensions are areas of particular difficulty in divorce. While California law usually removes your ex-spouse from much of your estate planning documents automatically, retirement plans and pensions are governed by the Employee Retirement Income Security Act, a federal law that preempts, or trumps, California law. ERISA does not automatically remove your spouse's right to inherit your pension or retirement benefits upon divorce. Under certain circumstances, California courts have also refused to recognize provisions of a marital settlement agreement, a legal contract between you and your spouse which sets out your property division intentions upon divorce, in which your spouse has waived rights to retirement benefits and life insurance proceeds. Therefore, it's important to update your estate plan with regard to retirement and pensions or the law may create an unwanted result.
Death and Divorce
When one spouse dies in the middle of the divorce process, before the divorce has actually been finalized, any estate plans remain unchanged by law. This means that if you die mid-divorce, your soon-to-be ex-spouse will still have the right to receive property under your will and any trusts you may have created. You can always modify your power of attorney, as well as revoke your will and create a new one, after divorce proceedings begin. However, a living trust is different. Once divorce proceedings begin, you typically cannot modify or create a new living trust until the divorce is completed. However, depending on the circumstances, you may be able to revoke, or cancel, other types of trusts.