Many people believe their divorce will be simple: just split everything in half, retirement benefits included. Emotions often interfere with this, and on occasion, the law does as well. Each spouse’s concept of what is “fair” comes into conflict.
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The Impact on Your Estate if You Die Before a Divorce is Final
The untimely death of chef and actor Anthony Bourdain has brought to national attention the potential ramifications of a person’s death during a divorce proceeding. In the same vein, it has highlighted the importance of understanding what would happen to your estate if you were to die during the pendency of your dissolution without having made any changes to your estate plan.
As occurred with Mr. Bourdain’s untimely death, he had been separated from his wife of 20 years for a year and a half. Though the pending “divorce” was made very public, it is unknown whether any divorce filing actually occurred,
What if does indeed happen if you have not taken steps in expectation of a permanent separation (indeed some are more permanent than others)? The broad answer to this complicated issue depends on whether your passing occurs before or after entry of judgment terminating your marital status. This discussion describes what occurs under California Probate and Family Law. The rules for these scenarios may be different in other states.
Death Before Entry of Judgment Terminating Marital Status
If you should die before entry of a status-only judgment, the Family Law Court would lose jurisdiction over all issues, except those already adjudicated. In California, this is called Abatement, and it happens automatically in this situation. Under these circumstances, your share of the community property and all of your separate property would pass as if the Divorce had never been filed! This is true, regardless of who originally filed, how long the divorce went on, how long the period of separation, or how hostile the parties were to each other during the process. It is also true regardless of cohabitation with a new significant other, regardless of the length of that cohabitation.
Therefore, your assets would pass to the beneficiaries of your current estate plan, which is usually your surviving spouse. If you do not have an estate plan, your estate, if over $150,000.00, would pass through probate, and your spouse would potentially receive all of the community property assets and a share of the separate property. Any non-probate assets, such as retirement assets and life insurance plans, would pass to your designated beneficiaries, again, normally your estranged spouse.
Death After Judgment Terminating Marital Status
If you should die after a status-only judgment (a provision of California law that allows the divorce to occur before, or separate from, the resolution of the other issues) that expressly reserves jurisdiction over the remaining issues in the case, the Family Law Court would retain jurisdiction and the property division would take place there. The personal representative of your estate would be substituted in your place in the divorce for this purpose, and the Family Law Court would be able to decide the outstanding issues in the case. It is worth noting, that the court’s jurisdiction over custody, child support, and spousal support would terminate automatically upon your death in the vast majority of cases.
Death after a status-only judgment also has a very different impact on how your estate would be distributed. A judgment of dissolution automatically terminates non-probate transfers between former spouses, including wills, trusts, and beneficiary rights under retirement plans. It also terminates the right of survivorship interest in joint tenancies and community property with right of survivorship. Unless the respective wills provide otherwise, the judgment also revokes all testamentary transfers between former spouses and any provision in a will nominating the former spouse as trustee, conservator or agent. However, a judgment of dissolution does not terminate the surviving spouse’s rights as a designated beneficiary under the life insurance policy. While the ability to change a beneficiary of a retirement plan or life insurance policy may remain during a divorce, California law prohibits such a change after the filing or service of Divorce papers.
One issue that everyone should consider with an impending divorce is that if you do not sign documents specifically stating otherwise, your estranged spouse will continue to hold the power, upon your incapacity, to make medical decisions on your behalf and, like in the case of Anthony Bourdain, will be the person to make all decisions regarding the disposition of your remains.
While no-one anticipates their death, the best course of action, always, is to prepare for that eventuality with an updated, current estate plan, which takes into consideration all aspects of your life, including an impending divorce. Sometimes doing nothing is indeed a conscious choice; by way of illustration a person with knowledge of a terminal illness also going through a divorce who chooses to maintain or change his/her estate plan. Sometimes it’s simply doing nothing.
Obviously we recommend that you always make that conscious choice knowing all of the consequences of that choice.
Determining Who Gets the House in a Divorce
California is one of only a few states in the country that use community property rules when deciding how assets are divided in divorce. To put it simply, property gained or improved during the marriage will be split as evenly as possible; the same is true for marital debt.
For many divorces sorting through and splitting much of their property isn’t much of a problem, but once the family home is on the table, matters can escalate quickly. And it makes sense that they should. Your home is probably your most expensive asset and everyone in your family depends on it. So who is going to get it when the divorce finalizes?
Deciding Factors the Court Will Review
Unless you and your spouse worked out ahead of time who gets your family home and why – this would be a considerable stroke of luck – a California divorce court is going to have the final say in the matter. Knowing what the court is looking for when coming to its decision can help you gain an advantage and increase your chances of keeping the house you put so much time and energy into.
Some of the factors the court will consider are:
- Separate or community: First of all, what kind of property is your home: separate or community? And are you certain? Separate property is what belonged to just you or just your spouse before you got married, and sometimes specific inheritances and gifts. Community property is what you purchased together, or improved together while married. Your ex-spouse may have owned their home before you even met them, but if you contributed to the household significantly during the marriage, it could have been changed into community property in the court’s eye.
- Child custody: The divorce court’s credo may as well be “best interest of the children.” Whenever two parents divorce, each decision needs to weigh how it will affect their children. This is true for deciding who gets the family home. The parent who earns primary or sole custody rights is more likely the one who keeps the home because it eliminates the stress of moving, possibly to a new neighborhood or city, that children can experience.
- Practical considerations: How much money has been put towards the home so far? How much still remains before it is paid off? What is the mortgage amount right now? The court needs to consider whether or not each spouse can afford to keep the home, or if any of them can on their own. If not, it could be more practical just to sell the property and evenly divide the collected value.
Room for Explanations & Arguments
Nothing is set in stone when it comes to legal matters, no matter how serious the legalese on the paperwork. If you are worried that your family home will go to your ex-spouse instead of yourself, don’t just sit idly by and let it go away. Make an argument as to why you should keep the home, refine it, and bring it to court. You never know what will influence the judge to see things your way.
At Holstrom, Block & Parke, APLC, our Southern California divorce attorneys can help you understand your property rights and compete for your family home. With more than two centuries of total legal experience focused primarily on family law, you know you can trust us when it comes to even the most complicated of divorce cases. Contact our firm today and ask about scheduling a free consultation over the phone.
Protecting Your Business Assets in a Divorce
Decades of hard work can go into the creation of a successful business and when a divorce puts your assets at risk, it can create a significant threat to your livelihood. Even if a company was founded before a marriage, your spouse may have legal grounds to claim that your business should be counted as community property. California’s laws regarding the division of property state that each spouse must receive an equal share of marital assets. If you do not take legal preparations, your business could take a substantial hit. Below, our blog outlines several strategies that you can use to safeguard your business interests in the event of a divorce.
- Prenuptial and postnuptial agreements: If your business was created before a marriage, protect it by naming it as separate property in a prenuptial agreement. Similarly, you can protect a business that was created after a marriage through the use of a postnuptial agreement. “Postnups” have the greatest chance of success when written well before a divorce is ever on the horizon. These agreements can state early on what portion of a business if any a spouse may be able to claim upon divorce.
- Give up other assets: The laws in California dictate that the total value of assets received by divorcing spouses must be equal. As the owner of a company, you may be able to retain control of your business if your spouse receives equal compensation through other assets. You may consider sacrificing your claim to any sizable investment, retirement, or insurance accounts in exchange for your business assets.
- Separate business and personal finances: While assets that were acquired or created before a marriage are typically considered separate property, investing marital assets into an otherwise separate business, which is regarded as commingling assets, can cause complications. separate business (this is called co-mingling assets) can introduce complications. For example, if a business owner were to use shared income to purchase company supplies, a spouse can claim that part of the business has undergone transmutation by becoming community property. Maintaining complete and accurate records of all business-related transactions can help to substantiate your claims in the courtroom.
Help for Business Owners Working through Divorce
When it comes to protecting your business interests in a divorce, it pays to take legal action as soon as possible. If you are currently working through or anticipating the end of a marriage, do not waste any time in contacting Holstrom, Block & Parke, APLC.
Our Southern California divorce attorneys have substantial experience representing clients in high-asset divorce and understand the unique problems you may face as a business owner.
Call (855) 939-9111 and schedule a free phone consultation to get more than 300 years of collective experience in your corner.
Can Obamacare Help Me?
It’s not a secret that divorce among the over-50 crowd is on the rise. If the Affordable Care Act works as intended, the law could prove to be a game-changer, by easing the financial burden of health insurance for divorced people who get dropped from their spouse’s medical plans.
Every year approximately 115,000 women no longer have health insurance as a result of divorce.
This is due in part that they either do not work outside the home or work for employers who do not provide health insurance. A small portion of women do have employer-sponsored coverage but can no longer manage to pay the expensive costs. Many are eligible for post-divorce COBRA health plans, but COBRA is both exorbitantly expensive and is short term, lasting only about 36 months.
Generally people get dropped from their spouse’s plan, so the new legislation will help those with little or no coverage get the care they need to maintain a similar standard of living before the divorce.
Financial problems for divorcees over 50 years old may now be alleviated through Obamacare or the Affordable Care Act. Ex-spouses, left without health insurance after the divorce, many now have affordable options that may lessen the blow of divorce.
Beginning on January 1, 2014, under the Affordable Care Act, post-divorce health-care expenses will decrease for many and become more accessible. Under the new legislation, denying people coverage or increasing their premiums due to pre-existing conditions is prohibited.
This is good for how ex-spouses who can leverage health-care coverage in alimony talks. Under the Affordable Care Act, a government tax credit can go toward an ex-spouses’ health-care coverage, and having this subsidy can be a determinate into spousal support computations.
When initiating divorce proceedings, individuals should obtain a court order to guarantee that health insurance costs will be paid. In addition, couples should research how long-term care insurance may change because of divorce.
Whether you are the person filing or the one being served with divorce papers, you may have many questions about what to expect. When you are going through a divorce there are many unknowns. Your questions can be answered and your uncertainties put to rest with the counsel of a capable Family Law attorney.
Contact the Family Law offices of Holstrom, Block & Parke, located in Riverside, San Bernardino, and Orange Counties. Our divorce attorneys will sit down with you and help you plan a course of action that will put you in the best position possible once the divorce is filed.
Don't Leave Your Estate In California's Hands
Every adult should have an estate plan. Whether your planning needs are simple or extremely complex, you need a plan that is customized to your assets, your family structure and your goals.
Whether you choose to have a Will or a Living Trust, both provide for the distribution of your estate upon your death. Deciding which fits your needs depends on your specific circumstances.
A Will is a legal document that allows you to choose your beneficiaries and leave them specific items from your estate. You will need to designate an executor to carry out your wishes. In addition, it gives you the chance to nominate a guardian if you have minor children. It is subject to probate and comes into effect upon your death.
As for costs to prepare, a Will costs less than a Trust; however, costs to probate a Will can be substantial.
Even though a Will comes into play upon your death, a Living Trust can start benefiting you while you are still alive. It allows you to transfer substantially all of your property into your Trust during your lifetime and it is revocable, which means you can make changes. It will be used to manage your property before and after your death, as well as provide how your assets will be distributed after your death. If you become disabled or incapacitated, the Trust is in place to manage your financial affairs. A great benefit is that it is not subject to probate and all provisions will remain private.
As for costs to prepare, fund and manage, a Living Trust costs more than a Will; however, it avoids probate costs if all assets were held by the Trust.
If you die without a Will or Living Trust, your estate will be handled and your assets distributed by the court – probably to your spouse or closest heirs. This may or may not be what you wanted.
Estate planning involves difficult decisions about your personal matters. It demands individualized solutions for your objectives.
Whether you’re just beginning the estate planning process, or you need to update an existing plan, contact the Orange County Family Law offices of Holstrom, Block & Parke because we take pride in providing experienced counsel with excellent service in determining the right estate planning tools for your family.
About Dayn Holstrom
Dayn Holstrom is a hard working, compassionate problem solver who welcomes the opportunity to serve you in any way he can. His maximum availability to your questions and concerns begins with your free initial consultation. He is well-seasoned in all matters related to family law and a skilled negotiator and litigator.
Divorce: Emotionally & Financially Devastating
Divorce, custody battles,child support, alimony, modifications or contempt actions can be emotionally and financially devastating for everyone involved.
You need to make financial and logistical adjustments, carefully monitor your legal rights and manage heightened emotions during this stressful time. If you have children, matters can be complicated further. While these issues are basically the same for most couples, you may face very specific concerns according to your unique position.
In California, the only reason needed to end a marriage is ‘Irreconcilable differences’. In addition, California is considered to be a community property state, which means all marital property is split 50/50.
Community property consists of:
- Home – resident, rental and any vacation properties
- Motor vehicles, recreational vehicles
- Financial – bank accounts, pensions, any income earned
- Other assets – jewelry, household furnishings, art collections
- All debts incurred
Property not included in the division would be ‘separate property’, which means any property owned before the marriage took place, including an inheritance or bank accounts which was kept separate from marital accounts.
Issues that need to be decided upon include:
- Spousal support – depending on the length of the marriage, etc.
- Ability of one spouse to pay the other
- Child custody, child support, visitation – if there are children involved
At Holstrom, Block & Parke, we help clients throughout Riverside County with a wide variety of child support matters including enforcement and modification issues. We do everything we can to ensure that you receive the maximum level of support available for your children.
We will work to ensure that the income figures are accurate and aggressively argue any special circumstances that might call for additional support. We will pursue every option available to obtain the most favorable possible result in your case.
If you need dependable advice about your options during the divorce process,contact the Riverside Family Law offices of Holstrom, Block & Parke. We focus on you and your family, so you can focus on the future.
About Dayn Holstrom
Dayn Holstrom is a hard working, compassionate problem solver who welcomes the opportunity to serve you in any way he can. His maximum availability to your questions and concerns begins with your free initial consultation. He is well-seasoned in all matters related to family law and a skilled negotiator and litigator.
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