Estate Planning During and After Divorce: What You Need to Know

Divorce is a significant life event that impacts every aspect of your future, including your estate plan. Whether you’re in the process of filing for divorce or have finalized it, updating or creating an estate plan is critical to ensuring your wishes are honored and your loved ones are protected.

At Hermance Law, we’ve helped countless Californians navigate this complex intersection of family law and estate planning. Here’s what you need to know to secure your legacy during and after a divorce.

Why Estate Planning Is Crucial During Divorce

Divorce is a lengthy process, and many people don’t realize how vulnerable their assets and wishes are while proceedings are ongoing. In California, filing for divorce triggers an automatic stay, or Temporary Restraining Order (TRO), which prevents transferring assets. This restriction can complicate your ability to establish or update an estate plan.

Working with an estate planning attorney before filing ensures you can document your wishes, designate trusted agents, and make necessary asset transfers before the TRO takes effect. Without a plan, your spouse could retain control over your assets if something happens to you during the divorce process.

Updating Your Estate Plan After Divorce

Once your divorce is finalized, it’s essential to revisit your estate plan. This includes updating key documents such as:

• Your Will: Name a new personal representative and ensure your assets go to beneficiaries of your choosing.
• Trusts: Create a new trust for yourself or revoke a joint trust. Identify beneficiaries you trust to handle assets for minor children.
• Powers of Attorney: Update financial and medical powers of attorney to designate someone you trust to act on your behalf if needed.
• Healthcare Directives: Ensure your wishes for medical care are clearly documented and assign a trusted agent to make decisions if you are unable to.

These updates not only reflect your new life circumstances but also safeguard your wishes for the future.

Protecting Minor Children Through Estate Planning

For divorced parents, ensuring that minor children are financially protected is a top priority. Many parents are surprised to learn that if they pass away, their child’s other parent often gains control of the child’s inheritance—even if they’re remarried or estranged.

One solution is to create a trust that places a trusted individual, such as a sibling or close friend, in charge of managing the child’s inheritance. This ensures the funds are used exclusively for the child’s benefit and not influenced by the ex-spouse’s financial decisions.

Avoiding Common Estate Planning Loopholes

Some individuals consider naming a family member, such as a sibling, as the beneficiary of life insurance policies or other assets to bypass potential conflicts with an ex-spouse. However, this approach carries risks:

• No Legal Obligation: The beneficiary has no legal requirement to use the funds for your child’s benefit.
• Creditor Risk: If the beneficiary is sued or files for bankruptcy, the assets could be lost.
• Unintended Heirs: If the beneficiary passes away, the assets become part of their estate and may go to their heirs instead of your child.

Establishing a trust eliminates these risks by legally binding the trustee to act in the best interests of your child.

Common Questions About Divorce and Estate Planning

1. Can I update my estate plan while going through a divorce? Yes, but timing is critical. If you update your plan before filing for divorce, you can transfer assets and complete documentation without restrictions. Once the divorce is filed, the automatic stay limits asset transfers, making updates more complex.

2. What happens if I don’t update my estate plan after divorce? If your estate plan remains unchanged, your former spouse could inherit assets or retain decision-making authority in critical areas, such as healthcare or financial matters.

3. How can I protect my child’s inheritance from my ex-spouse? Creating a trust allows you to designate a trusted individual to manage the inheritance, ensuring funds are used solely for your child’s benefit. This prevents your ex-spouse from gaining control of the assets.

4. Do I need a new estate plan if I remarry? Yes. A new marriage often brings additional financial and family considerations, making it essential to update your estate plan to reflect your new circumstances and priorities.

Secure Your Legacy With Hermance Law

Divorce marks a significant life transition, and updating your estate plan is an essential step in protecting your family’s future. From ensuring your assets align with your wishes to safeguarding your children’s inheritance, Hermance Law is here to guide you every step of the way.

Take control of your future today. Visit www.hermancelaw.com or call 805-749-5313 to schedule your free consultation. Your family’s security and peace of mind are just a call away.