Estate Planning & Divorce

Here’s a story we at Lawvex would like to share with every family law attorney we can. Sharing this story will help you protect your clients wishes during divorce and add tremendous value to your representation. Recently, we had a case where a spouse (let’s call him Bob) was in a pending divorce and went back to the same estate plan drafting attorney (not Lawvex) where Bob and his soon-to-be-ex-spouse (let’s call her Carol) had done their joint estate plan and revocable trust. The estate plan attorney created a new advance health care directive, financial power of attorney, will and trust for Bob.

Every good estate planning attorney knows and understands that there are certain things a party to a divorce can and can not do – and it is completely appropriate and legal to create a new advance health care directive, a new financial power of attorney so that if Bob becomes incapacitated, someone other than Carol will make his medical and financial decisions. Also, Bob can create a new will – he can even create a new trust. However, Bob can not take assets out of the prior joint trust he had with Carol and put them in his new trust until the divorce court judge approves.

If Bob dies prior to the divorce being finalized, the concept is that Bob’s new will (a pour-over will to the trust) will “catch” Bob’s community / separate interest in the divorce proceeding and the executor of Bob’s estate will step in and represent Bob’s interest to complete the divorce proceeding as to the property and then distribute to the trustee of Bob’s trust at the completion of Bob’s probate.

But – here is where Bob and the drafting attorney got into trouble. And this is what we at Lawvex want to share with our family law / divorce attorney friends…

When Bob died prior to the divorce being final, everyone thought his new will and trust would revoke the prior joint trust with Carol. THEY DID NOT. To amend or revoke a joint trust, there are very specific actions that must be taken. Here’s what the court said went wrong with Bob’s attempted new estate plan:

1. Bob assumed that by using the same estate plan drafting attorney (who also represented Carol) that the drafting attorney would notify Carol;
2. The estate planning attorney did not notify Carol;
3. The estate planning attorney did not advise Bob of the inherent conflict of interest by working with Bob alone during the pending divorce;
4. The estate planning attorney did not advise Bob of the specific manner in which the joint trust had to be amended/revoked during the divorce; and
5. The estate planning attorney did not file any notice of Bob’s new plan in the divorce case or serve it on any of the parties.

As a result of the lack of effective notice to Carol (the other trustor of their original joint trust) Bob’s new estate plan did NOT revoke his prior joint trust with Carol and Bob’s wishes regarding his community and separate interest were not carried out. Bob’s assets ended up passing to his soon-to-be-ex-spouse, Carol.

Lawvex is the largest full-service estate and trust law firm in Central California. In 2022, we opened 386 estate planning cases (over 1 new estate plan case per day). Lawvex also does estate and trust litigation cases. The Bob and Carol case is based on an actual case where Lawvex represented Bob and Carol’s son, (let’s call him David), who was the successor trustee and one of the beneficiaries of Bob’s new trust.

Thanks for taking a few minutes to check out our Lawvex Pre-Divorce Estate Update page. At Lawvex, we believe in Education for our clients and other attorneys. We created this page to share knowledge and understanding for California family law and divorce attorneys and parties to pending divorces to learn about what and how you can and should update your estate plan during divorce.

If you are a party to a divorce and want to update your estate plan, or if you are a family law/divorce attorney and would like to refer a client, click Book a Strategy Session below and our Intake Specialist will connect you with one of our Estate Planning Attorneys.

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