Mistakes to Avoid During Estate Planning in a California Divorce
Establishing an estate plan is an important part of successfully completing a divorce. There are several mistakes to steer clear of during the estate planning process, and certain steps that can be taken to ensure these mistakes are avoided. Here are 10 mistakes to avoid during estate planning in a California divorce.
According to California law, a person remains legally married until a judge signs a final divorce decree, so unless proper action is taken to update their estate plan, divorcing couples may run into some issues that could have been prevented.
1. Waiting to change advanced health care directive
An advance health care directive provides an individual with certain elements of protection in the event they become incapacitated or incapable of making decisions for themself. These elements include:
- Power of attorney, which allows for a family member or friend to care for decisions on their behalf
- Detailed instructions on an individual’s wishes regarding the use of life support and personal decisions during their incapacity
Thus, it is important to note that individuals do not need to wait until their divorce is finalized to change this directive. Changing their durable power of attorney is quite important while the divorce is pending. This avoids any mismanagement of their financial affairs or matters by a soon-to-be ex-spouse. Generally, it is useful to choose someone trusted and with a proper understanding of how to handle financial matters.
2. Not editing their will before the divorce is finalized
A person undergoing a divorce has the option to prepare a new Last Will and Testament, change the beneficiaries on their current last will and testament, or revoke it altogether. Taking proper precautions with a will ensures that an individual is dictating how their assets will be inherited. If they forget to remove their ex-spouse from their will after the divorce is finalized, this may complicate matters regarding how their property is distributed to family members.
3. Transferring or hiding assets or property
For both community and separate property, transferring or hiding assets in secret is punishable under the civil code. Furthermore, spouses that are caught attempting to secretly relocate their assets are not looked upon kindly by family court judges and may incur serious financial repercussions as a result.
Related: How to Find Hidden Assets in a California Divorce
4. Funding a new trust
Whether revocable or irrevocable, funding a new trust is not allowed during a divorce. This is also applicable for a non-probate transfer or a modification to a non-probate transfer, such as life insurance, benefit plans, and IRA, as this will be viewed as directing assets away from your spouse.
5. Not consulting with legal counsel
Some aspects of changing an estate plan are generally straightforward. However, it is always beneficial to ask an experienced estate planning attorney about the best courses of action for efficiently sorting out financial affairs in the midst of a divorce. Overall, an experienced attorney will explain the basics of estate planning as well as any possible issues that may arise.
6. Creating an incomplete estate plan
An incomplete, improperly drafted estate plan will run the risk of family disagreements, higher taxes, unnecessary probate feed, and will contests, to name a few examples. Thus it is important to go a step further from fill-in-the-blank worksheet documents and work with legal representation to ensure your estate matters are legally binding and correct.
7. Misunderstanding estate plan documents or their implications
It is important for an individual to recognize the responsibility they have to understand the main ideas expressed in their estate plan documents and how they will affect family members in the long run. Failure to understand one’s own estate plan documents is a large reason why some plans are not accurately created, and may even end up in probate court.
8. Improperly titling any assets or leaving trusts unfunded
A living trust is “funded” when it owns something, such as a piece of real estate. Regarding real property, if an individual wants that property to pass through their living trust after they die, it is essential that the property title is always in the name of their trust. This can be accomplished in California by recording a simple quitclaim deed, which is a form of transferring interest from one party to another.
Related: Quitclaim Deeds in a California Divorce: The Basics
9. Neglecting to revisit guardianship documents
Guardianship documents will be an important part of estate planning, especially if the divorce at hand involves one spouse who is a concern for the other. If a spouse feels as though their soon-to-be ex-partner exhibits concerning behaviors, whether it be for substance abuse problems, mental health issues, or a different reason, this should be documented along with estate plans. By putting these concerns into writing, a judge will at least be able to review any grievances if necessary, and a change in guardianship designation may be completed in an estate plan.
10. Dismissing small details for the completed estate plan
It is essential for a person going through divorce to understand their role in creating their estate plan. By actively participating in the creation of the plan and asking for clarification on certain details when necessary, they will feel more organized and prepared in providing for family members. This also ensures that a person’s estate plan includes all necessary details and covers all possible outcomes for the person creating the plan.
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If you are planning to establish an estate plan in a California divorce, contact us. Our experienced attorneys will help you avoid common mistakes during estate planning in a California divorce. Get your free consultation with one of our California Property Division Attorneys today!