Estate Planning is for Lovers
At Valentine’s Day, love is in the air. Below is a quick review of how to update your estate plan in anticipation of marriage. And while we’re hopeless romantics, we also know it doesn’t always work out. Keep reading and you’ll also find a review on how to update your estate plan in connection with a divorce.
In Contemplation of Marriage or Soon After Marriage
Trusts and an estate plan provide for management of your assets should you be incapacitated and for the orderly transfer assets of at your death. This is valuable to all people regardless of relationship status. For a single person with assets about to marry, there are some particular considerations:
A separate property trust prior to marriage can keep the trust assets separate, even after you start to accumulate joint or community assets. After marriage you and your spouse can create a joint trust to manage your joint and community assets.
Separate property trust planning is easy to do and does not require the cooperation of your fiancé, but it does not cover spousal support and is not a substitute for a pre-marital agreement drafted by a skilled family attorney.
If you enter a marriage with a trust and an estate plan, you will want to update it to be clear about how you intend to provide for your new spouse and update your documents. If you are not explicit in your estate planning documents about your marriage and spouse, the default laws of the state of California will apply and you may not like how they work – especially if you have children from a prior marriage.
In Contemplation of Divorce or Soon After Divorce
If your marriage ends, you’ll likely want to update your estate planning documents and beneficiary designations to remove your divorcing spouse; but beware, there are rules of the road.
California Family Code Section 2040 provides for an automatic restraining order (“ATRO”) immediately upon the service of a summons in a dissolution proceeding that prohibits (among other things) transferring, encumbering, concealing, or disposing of any property. This may mean that you need to wait until the expiration of the ATRO to complete your estate plan update.
When parents divorce, you’ll want to take care how your estate plan provides for your kids and in some cases your ex-spouse may be the right candidate to serve as trustee of trusts for your children, but not always.
Every case is different, and I often work with clients' divorce attorneys to ensure we make prudent and valid updates.
Whatever your relationship status, I hope you’ll enjoy some of this beautiful weather with people you love.