When a spouse or domestic partner commences a proceeding in court to dissolve a marriage or domestic partnership, four temporary restraining orders (or “TROs”) automatically take effect, which prohibit either party, upon service of summons, from certain actions until a final judgment of dissolution is granted by the court.
These TROs include (1) a prohibition on both parties from removing a minor child from the state without prior written consent or a court order; (2) restraint from transferring or disposing of any property, whether separate or community, without written consent or a court order, subject to some exceptions; (3) prohibiting either party from canceling, altering, or cashing any insurance coverage held for the benefit of the other party or their children; and (4) a restraint on creating or modifying a “nonprobate transfer,” such as a revocable trust or pay on death beneficiary account.
What a spouse or partner may and may not do with respect to their estate planning can be confusing for clients. We hope to simplify the process for our clients so that they can make informed decisions about altering their estate plans without violating any orders from the court during their divorce proceeding.
After a spouse or partner has filed a petition for dissolution or legal separation, the restraining order on “nonprobate transfers” takes effect, yet the parties may be anxious to alter their estate plans to exclude their spouse or partner. In California, the courts will not grant a judgment of dissolution or legal separation prior to six months after commencing the proceedings, and some parties view this as a long time to wait before they can change their estate plans. Below is a list of actions that the parties may take while their dissolution is pending with regard to their estate planning:
(1) During a divorce proceeding, without notice to their spouse or partner, a party may create certain estate planning documents that do not affect the disposition of any property. A party may unilaterally create, modify, or revoke a Will; exercise a power of appointment in a revocable trust; or create a new revocable trust, although funding of any such trust must wait until a final judgment of dissolution.
(2) Some actions are allowable only after a party has given notice to their spouse or partner. A party may revoke a revocable trust; revoke a disposition to a beneficiary of nonprobate transfers, such as pension and employee benefit plans; and even eliminate their spouse’s right of survivorship in a certain asset. These actions, however, must be preceded by notice to the party’s spouse or partner.
(3) While revoking a transfer only requires notice to a spouse or partner, a party must obtain the written consent of a spouse or partner, or a court order, to create or modify a nonprobate transfer or to fund a trust.
(4) Absent your spouse or partner’s written consent, you may not fund or create a nonprobate transfer without a court order. Similarly, a court order is required if either party wants to cash in a life insurance policy when spousal or child support is at issue.
After judgment of dissolution is received, each spouse or partner’s right to distributions and/or assets terminates automatically, except as to designations under federal ERISA governed benefits (such as a 401k or certain pension plans) and life insurance policies.
Changes in your estate plan prior to or during dissolution proceedings may not be necessary or advisable for all parties contemplating divorce or waiting for a final judgment of dissolution. However, if you are considering making any changes, we can work with you to determine what steps to take to avoid violating either party’s duties under the TROs imposed during the dissolution proceedings.