Californians Going Through Divorce Should Address Their Estate Plan

Summary: One should consider starting on one’s estate plan modifications prior to completing your divorce. A living trust empowers Californians by avoiding probate, ensuring privacy, and adapting to life’s twists and turns. A living trust should be the basis of a California residents estate plan.

Introduction: As soon as you know that your marriage is ending, it’s time to rethink your Estate Plan. Even though some things can’t be changed while you are in the middle of a divorce, you’ll want to make plans for when the divorce is finalized, including how you will address your beneficiary designations.  A Living Trust (also called an Inter Vivos Trust) is usually the cornerstone of an effective California Estate Plan.

1. Automatic Temporary Restraining Orders (ATROS) in a divorce.

There are important rules regarding One should consider starting on one’s estate plan modifications (or the preparation of an estate plan) prior to completing your divorce. A living trust empowers Californians by avoiding probate, ensuring privacy, and adapting to life’s twists and turns. Their are important rules regarding the manipulation of community property assets during a divorce.To prevent one spouse from making a major financial decision that could affect the other, automatic temporary restraining orders, or ATROS, are issued when divorce proceedings begin and go into effect upon service of the summons and petition of divorce. The ATROS prevent either spouse from disposing of or moving property without the written permission of the other. This excludes money needed to run a business or for the necessities of life. Separate property is also included in the restraining orders. This prevents the transfer of funds that should be used in determining spousal and child support.

2. What documents can be changed while a divorce is still in progress?

You can create a new Revocable or Irrevocable Trust, but you cannot fund it. You can establish a new Trust during this time, as long as you do not put any assets into it until the divorce is finalized.

3. What happens if I don’t change my Estate Plan after the divorce?

If you have an Estate Plan in place and you fail to modify it you will give your heirs legal problems. This is why it is often wise to create an new, unfunded Living Trust prior to the completion of the divorce.

4. Living Trusts Help Californians Avoid the Probate Process

Probate: The court process that validates a will and oversees asset distribution—can be a daunting experience. While legal oversight ensures fairness, the drawbacks of probate can outweigh the benefits.

In California, probate can be time-consuming, taking months or even years to complete. During this period, beneficiaries may not have access to the assets designated for them. Moreover, probate can be costly due to lawyer fees, court expenses, and other charges.

Solution to Probate: A living trust allows you to sidestep probate. Unlike a will, where you personally own the assets, a living trust holds them separately. When you pass away, the trust assets can be distributed directly to beneficiaries without court intervention, saving time and money.

5. Living Trusts Enhance Privacy

Issue: Probate makes your will a public document accessible to anyone. Details about assets, their value, and beneficiaries become part of the public record.

Scenario: Imagine leaving a substantial inheritance to a financially inexperienced child or grandchild. Public knowledge could attract financial predators or create family disputes.

Benefit: A living trust provides privacy. Asset details and recipients are no longer public, safeguarding your loved ones from unnecessary complications.

6. Living Trusts Afford Flexibility Amid Life Changes

Living trusts, also known as revocable trusts, offer adaptability. While you’re alive, you can amend or revoke the trust as needed. Life circumstances change—marriage, divorce, additional children, or financial shifts.

Ease of Adjustment:

• Minor changes (e.g., adding a beneficiary) require simple amendments.
• Major adjustments (e.g., altering asset distribution) may involve restating the entire trust.
• Either way, being able to update your living trust ensures it accurately represents your current desires and situation.

Advanced Option:

• Transition to an irrevocable trust for tax planning or asset protection.
• Note that this step limits your control over trust assets.

 

Galen Gentry assists clients in Los Angeles and Southern California with divorce, determining community property and community debt, distinguishing separate property and with issues relating to spousal support, child support and custody and estate planning.  Mr. Gentry has 30 years of experience and can help people to protect their interests. Call at (310) 282-7521 or contact us online by using the Orange form on the right of your screen to schedule a free consultation.