Updating Your Estate Plan After a California Divorce

A California divorce changes a lot of things in a hurry — the family home, the financial accounts, the parenting schedule. What it does not automatically change, except in specific limited respects, is the estate plan.

California law contains some automatic-revocation rules for provisions in favor of a former spouse. But the automatic rules cover only part of the picture, and the gaps they leave can produce significant unintended consequences. This post is a short walkthrough of what the law does automatically, what it does not, and what someone going through or just past a California divorce should do.

What California law revokes automatically

Under Probate Code § 6122 (for wills) and § 5040 (for non-probate transfers including trust provisions and beneficiary designations), a final judgment of dissolution of marriage in California automatically revokes certain provisions in favor of a former spouse:

• A bequest in a will to the former spouse is revoked
• A nomination of the former spouse as executor or trustee is revoked
• A beneficiary designation in favor of the former spouse on certain non-probate instruments — including certain life insurance, retirement accounts, and "transfer-on-death" designations — is revoked under § 5040 unless an exception applies

The revoked provisions are generally treated as if the former spouse had predeceased the testator/grantor/owner. Contingent or alternate beneficiaries take in the former spouse's place; if no contingent is named, the property passes under the document's residual provisions or by intestate succession.

These automatic-revocation rules are useful, but they have important limits.

What the automatic rules do NOT cover

Several categories of estate-plan elements are not automatically affected by divorce:

• Provisions in favor of the former spouse's relatives. A bequest to a former mother-in-law, a former stepchild, or a former brother-in-law is not automatically revoked. Whether to keep those provisions is a choice; absent affirmative action they remain.
• Joint tenancy with right of survivorship. Real property held in joint tenancy passes automatically to the surviving co-owner regardless of will or trust provisions. Divorce does not sever joint tenancy automatically (though many divorce judgments include a quitclaim deed converting joint tenancy to tenancy in common).
• Powers of attorney. A durable power of attorney for finances or an advance health care directive naming the former spouse as agent is not automatically revoked under California law. Many people would not want their ex-spouse making medical decisions for them, but absent a new document, the old one continues to operate.
• Some ERISA-governed beneficiary designations. ERISA preempts state law for many employer-sponsored plan beneficiary designations. The Supreme Court's decision in Egelhoff v. Egelhoff, 532 U.S. 141 (2001), held that a state's automatic-revocation statute does not override an ERISA plan's beneficiary designation. For an ERISA-governed retirement account, the named beneficiary controls regardless of the divorce, until the participant changes the designation with the plan administrator.
• Federal-law beneficiary designations. Similar issues arise with certain federal-employee benefits, military benefits, and other federally-governed instruments.

The combination of these gaps means that an unattended estate plan can leave significant assets passing to a former spouse — or producing other unintended results — even after divorce.

What needs to be done manually

A typical post-divorce estate-plan update covers:

1. Will and trust. Even though the automatic-revocation rules cover much of this, restating the documents to reflect the new circumstances (different distribution scheme, new executor/trustee, different guardian for minor children) makes the plan clean. The cost of doing it is generally small.

2. Beneficiary designations. Every account with a named beneficiary needs to be updated:

• Life insurance policies
• Retirement accounts (IRAs, 401(k)s, 403(b)s, pensions) — particularly important for ERISA-governed plans where the automatic-revocation rules do not apply
• Annuities
• Bank and brokerage accounts with POD/TOD designations
• Health Savings Accounts and similar

The work of updating each one is largely administrative — log in or call the institution, fill out the form — but it requires going through each one. A short checklist of accounts is usually the right tool.

3. Powers of attorney. Replace the durable power of attorney for finances and the advance health care directive with new documents naming someone other than the former spouse. This is one of the most overlooked items.

4. Real property. Confirm the title status of any real property previously held with the former spouse. Where the divorce judgment included a quitclaim deed, confirm it was recorded. Where joint-tenancy ownership remains, severance may be appropriate.

5. Guardian designations for minor children. If minor children are involved, the will should reflect the appropriate guardian designation given the new family structure. The non-custodial parent generally has natural-parent rights regardless of the will, but the will's nominations matter for cases where the natural-parent path does not apply.

6. Trust restatements vs. amendments. For revocable living trusts that need significant updates, a full restatement is often cleaner than a series of amendments. The restatement re-issues the trust as a single document under the same date, preserving the trust's identity (and avoiding the need to re-fund) while updating the substantive terms.

Two situations that warrant extra care

Pre-divorce planning. Where a divorce is pending but not final, automatic-revocation rules do not yet apply. Spouses can take interim steps — changing beneficiary designations on non-ERISA accounts, executing new powers of attorney — but should be aware of any automatic temporary restraining orders (ATROs) or court orders that limit estate-plan changes during the pendency of the dissolution. ATROs in California family-law cases routinely restrict transfers of assets and changes to certain insurance policies. Coordinating with family-law counsel before making changes is essential.

Blended families post-divorce and remarriage. Where the post-divorce family includes a new spouse, children from the prior marriage, and possibly stepchildren, the estate-plan questions get genuinely complicated. Standard-form revocable trusts often do not handle blended families well. Custom drafting — and sometimes more sophisticated structures, such as QTIP trusts for the surviving spouse with remainder to the children of the prior marriage — is often appropriate.

When to call

The right time to update an estate plan after divorce is when the dissolution is final. The work can be done in a single engagement, typically on a flat fee, and produces a complete new set of documents that reflects the new circumstances.

If you have recently completed (or are nearing the completion of) a California divorce, please reach out.

This article is general information and not legal advice. The interaction of California's automatic-revocation rules, ERISA preemption, ATROs, and individual circumstances is fact-specific; specific situations need specific review with current authority.