Divorce is a significant life event that can have profound effects on various aspects of your life, including your estate planning documents. In California, these documents, which include your trust, will, power of attorney, HIPAA and health care directive, may need substantial revisions to reflect your new circumstances. Here's a detailed look at how divorce can impact these critical components of your estate plan and why immediate changes might not always be the best course of action.
Trusts
One of the primary estate planning tools, a trust, can be significantly affected by divorce. A trust is a legal entity that holds and manages assets on behalf of beneficiaries. During a marriage, it's common for spouses to set up joint trusts that benefit each other and their children. However, divorce changes the dynamics of these arrangements.
It's tempting to revoke a trust immediately upon deciding to divorce. However, premature changes could complicate the legal process and potentially result in unintended consequences.
Impact on Trusts:
Asset Distribution: In California, divorcing spouses must often wait for a court judgment before dividing and removing assets from the trust. This ensures a fair and legal distribution of property. After the judgment has been made by the court, then the assets can be moved out of the trust, the marital trust revoked and a new separate trust created.
Beneficiary Designations: If your ex-spouse is named as a beneficiary, you'll likely want to change this after a divorce is finalized. However, altering the trust document can be complicated and may need to wait until the divorce is finalized.
Trustee Appointments: Your ex-spouse may be named as a Trustee, giving them control over the trust assets. Post-divorce, you'll likely want to create a new separate property trust and appoint a new successor Trustee such as a family member or trusted friend.
Guardianship of Minor Children: If you have minor children, you may need to update guardianship designation document.
Power of Attorney
A power of attorney (POA) grants someone the authority to make financial and legal decisions on your behalf. Many married couples name each other as their POA, but divorce usually requires a change. You may want to revoke any existing POA that names your ex-spouse if you do not want them to make financial decisions for you and appoint a trusted family member or friend who can act in your best interests. This document can be changed prior to a divorce is finalized.
Health Care Directive/HIPAA
Health care documents such as an Advanced Health Care Directive and HIPAA Authorization specify your wishes regarding medical treatment and appoints someone to make health care decisions on your behalf if you're unable to do so. Similar to a POA, you may want to revoke any health care directive naming your ex-spouse and appoint someone else even before a divorce has been finalized.
Divorce is a complex process that requires careful consideration of various legal and financial documents. In California, when it comes to estate planning, it's crucial to review and update your trust, will, power of attorney, and health care directive to reflect your new circumstances. While it might be tempting to make immediate changes, waiting until a court judgment and the division of assets are complete is often the best approach to avoid legal complications for some of your estate planning documents. It’s a good idea to consult with an experienced and qualified estate planning attorney to navigate these changes and ensure your estate plan aligns with your post-divorce wishes.
If you, a friend, or family member need help establishing or updating an estate plan after a divorce, please reach out to our Intake Department at 760-448-2220 or at https://www.geigerlawoffice.com/contact.cfm. We have offices in San Diego County (Carlsbad) and Orange County (Laguna Niguel), but we assist can families throughout California as well.
