Thinking of a divorce requires consideration of your individual estate. Although parties may be tempted to begin moving around and liquidating assets after a divorce is filed, doing so would run afoul of the Cal. Fam. Code. Even prior to the filing of a petition for marital dissolution, Cal. Fam. Code Section 721 imposes a duty of the highest good faith and fair dealing among spouses. Actual divorce proceedings further trigger automatic restraining orders, pursuant to Cal. Fam. Code Section 2040, effective on the petitioner upon filing and the respondent on service.
ATROs, as they are commonly called, are essentially financial restraining orders that prevent a party from transferring, encumbering, hypothecating, concealing or in any way disposing of any real or personal property, irrespective of characterization, without the written consent of the other party or court order. If violated, a party can face a contempt action with the aggrieved party entitled to potential restitution and attorney’s fees. Pursuant to Cal. Fam. Code Section 233, the ATROs remain in effect the final judgment of dissolution is entered.
Despite the ATRO’s there are estate issues that either party can address prior to the entry of judgment. For example, a party may create, modify or revoke a will under Cal. Fam. Code Section 2040 (b)(1). A party can also create, but not fund, a new revocable or irrevocable living trust under C 2040 (b)(4) and 2040 (a)(2). Pursuant to Cal. Fam. Code Section 2040 (b)(2) and (d)(1) a party can also revoke a revocable trust and revoke the transfer to the beneficiary of a nonprobate transfer, so long as proper legal notice is filed and served on the other party before any changes are made. Further, pursuant to Cal. Fam. Code Section 2040(3), a party is allowed to eliminate a right of survivorship to property, with written notice.
It is generally advisable to sever joint tenancy assets upon filing for divorce because prior to entry of Judgment, the right of survivorship is preserved and the family court will have no power to apply California community property law to the property. In the event of an untimely death prior to the entry of divorce and, the property would pass in full to the surviving spouse. Given the effect of ATROs on a spouse’s individual estate, parties seeking legal assistance for marital dissolution would be wise to seek a Family Law attorney that has an estate planning strategy before, during, and after divorce. Many Family Law attorneys do not create individual estate plans, but they should know how one is affected by marital dissolution. And if you don’t have an estate plan at all, there’s never a better time than now to speak to an estate planning attorney and figure out how you want your estate managed and distributed to your loved ones after your passing.