Death is a certainty for everyone. Divorce is a certainty for roughly 48% of all Californians, according to recent studies. Divorce is also the second most traumatic event a person can experience; second to the loss of a loved one. People going through contested divorces often experience significant emotional and physical stress. So, it should come as no surprise when a spouse becomes incapacitated or passes away in the midst of their divorce. In one of my high-conflict mediations, the couple had finally reached agreements, the wife had already signed the judgment, but the husband missed his signing appointment. I later learned that he had a heart attack on the drive to my office and died. What happens with the divorce?
DEATH OF ONE SPOUSE BEFORE THE MARRIAGE IS FORMALLY ENDED:
If either spouse passes away before the judgment ending the marriage is entered, the family law court loses jurisdiction (legal authority) over all issues, except for those already formally decided (prior orders signed by the parties and (or just by) the judge).
Even though the wife signed the judgment documents, since neither the husband nor the judge signed it, it’s as if the Petition for Dissolution of Marriage was never filed. Wife is not divorced; she’s widowed. Probate court takes over at this point. Husband’s assets would pass to the beneficiaries of his estate plan (most often, that’s the surviving spouse). If he did not have an estate plan, his estate would pass through probate, and wife would receive all the community property and all or a portion of his separate property. Any non-probate assets, such as retirement and life insurance plans, would pass to the beneficiaries he designated in those plans.
In another matter, both spouses and the judge signed the judgment. As part of the agreements, they postponed the date of divorce to a future date to allow wife to stay on husband’s health insurance for a previously scheduled surgery. Wife died before the date of divorce. Again, the surviving spouse, the husband in this case, was widowed, not divorced. But, since the orders dividing the property were already entered, those orders remained binding and enforceable.
DEATH OF ONE SPOUSE AFTER A STATUS ONLY JUDGMENT IS GRANTED:
If either spouse passes away after the court entered a status-only judgment (ended the marriage but did not resolve assets/ debts/ financials), the family court retains the ability to make decisions about those reserved issues, with the executor of the will standing in for the deceased spouse. When a marriage terminates, trust and beneficiary rights under retirement plans and trusts (non-probate transfers) are automatically terminated as is the right-of-survivorship interest in joint tenancies and community property. However, the surviving spouse retains their rights as a designated beneficiary under a life insurance policy. And, unless otherwise stated in the deceased spouse’s will, a judgment ending the marriage also revokes all testamentary transfers between former spouses and any provision in a will nominating the former spouse as trustee, conservator, or guardian. If there is no successor trustee, the matter goes to probate court to appoint a trustee.
HOW TO PROTECT YOUR INTERESTS DURING A DIVORCE PROCESS:
You can protect your interests in case of incapacity or death before your divorce is resolved. Before making any changes relating to your assets, consult your family lawyer to make sure you do not violate any of the automatic Temporary Restraining Orders. You should also speak with a tax advisor since some of these recommendations can have significant tax implications.
Actions you can take without notice to your spouse or a court order:
- Change or create a health care power of attorney. This is important if you’d rather your soon-to-be ex not decide your medical care while you are incapacitated.
- Change or create a financial power of attorney. Equally important if you’d rather your soon-to-be ex not manage financial decisions for you while you are incapacitated.
- Create, modify, or revoke a will.
- Create, but not fund, a new single settlor revocable or irrevocable trust.
Actions that require notice to your spouse:
- Revoking a revocable trust.
- Revoking a transfer to the beneficiary of a non-probate transfer. With life insurances, you cannot revoke the beneficiary if there are issues of child or spousal support.
- Terminating the right of survivorship for real property.
Actions that require spousal consent or a court order:
- Funding a new trust (revocable or irrevocable).
- Creating or modifying a non-probate transfer in a way that changes the prior beneficiary designation. Pension plans are controlled by the Employee Retirement Income Security Act of 1974 (ERISA) and the nonparticipant (non-employee) spouse is entitled to be the beneficiary under federal law.
Actions not allowed during your divorce: Cashing, borrowing against, cancelling, transferring, disposing of, or changing the beneficiaries on life, health, auto, and disability insurance when child or spousal support is at issue.
Most couples in a contested (litigated) divorce are unaware of possible issues related to death or incapacity during the divorce process, and few are given an opportunity to discuss solutions to them. Family lawyers experienced in out-of-court processes like Collaborative Divorce and/or who are knowledgeable in estate planning tend to provide information on this topic, depending on the circumstances. I am often brought in on collaborative cases as an estate planning lawyer to help couples create agreements addressing these concerns, giving a probate court clear indication of their intentions, should something happen to either spouse before they complete their divorce.
Life can change in the blink of an eye. During Covid, we saw the courts completely shut down and the continued delays and backlog; we saw people succumbing to an illness that did not discriminate between the young and elderly, or the healthy and infirm; we are all on notice.
If you don’t have an estate plan in place, get one. The average divorce in California can take three to five years to complete. Whether you have an estate plan or not, whether you are in a contested divorce or a mediation, talk to your divorce professionals about preserving your interests should you become incapacitated or die before your divorce is resolved. A lot can happen in three to five years. Are you prepared?