Many people are surprised to learn that even though they filed for divorce, without a proper estate plan, everything that is community property is transferred to their spouse upon death. This means that up until you have signed your judgment paperwork, your estate is at risk.
At the law office of Mayer & Young, PC, we ask our clients the following questions:
Are you okay with your soon-to-be ex receiving all of the community property at issue in the pending divorce?
The majority of our clients respond with a resounding “no.” If you too are in this category be mindful of the following scenarios:
- If you currently have an estate plan with your spouse, it is likely that you chose to leave your property first to your spouse and then to another person (perhaps a child or other family member), and therefore it is time to revoke the old and draft a new plan that removes the soon-to-be former spouse from receiving your property.
- If you do not have a Will, the rules of intestacy apply. As such, California law provides that your one-half of any community property owned by you at the time of your death automatically transfers to your spouse. The law does not provide for the nuance of those couples who have initiated, but not finalized, a divorce.
On the other hand, we do have clients that would prefer for their property to still be transferred to an ex-spouse upon death and do not need to make any changes during the pendency of the divorce. After their divorce is finalized, however, California law voids estate plans drafted between formerly married persons for the public policy reason that the majority of those people getting divorced do not want their property accidentally left to their former spouse. In this situation, a new estate plan is necessary to allow for assets to transfer to a former spouse.
How is your real property held?
If your real property is currently held in trust, then you will need to look to your trust document to see how the property is transferred. As noted above, the trust likely leaves your property to the surviving spouse and this document would control at your death even if a divorce or legal separation was initiated, but not yet finalized.
On the other hand, if the real property is held with your spouse as joint tenants with a right of survivorship, then at your death your spouse will receive the entire property outright.
Given the foregoing, one of the first things that we recommend to a divorcing couple is to agree to change the title to their real property. One such way of doing so is with a new deed holding the property between both spouses as tenants in common (or 50/50 owners) until further negotiated in the dissolution process.
The divorce process can be time consuming and emotionally draining, so it is difficult to even consider adding another layer to an already overwhelming situation. Nevertheless, as explained above, the importance of estate planning during your divorce cannot be understated.