California Family Code Section 2040 imposes a number of restrictions on the transfer of property for spouses going through a divorce, also known as automatic temporary restraining orders (ATROs). These restraining orders remain in effect until the petition for dissolution of marriage is dismissed, a judgement is entered, or the court makes an order. The Code Section states:

(a) In addition to the contents required by Section 412.20 of the Code of Civil Procedure, the summons shall contain a temporary restraining order:

(1) Restraining both parties from removing the minor child or children of the parties, if any, from the state, or from applying for a new or replacement passport for the minor child or children, without the prior written consent of the other party or an order of the court.

(2) Restraining both parties from transferring, encumbering, hypothecating, concealing, or in any way disposing of any property, real or personal, whether community, quasi-community, or separate, without the written consent of the other party or an order of the court, except in the usual course of business or for the necessities of life, and requiring each party to notify the other party of any proposed extraordinary expenditures at least five business days before incurring those expenditures and to account to the court for all extraordinary expenditures made after service of the summons on that party.

Notwithstanding the foregoing, nothing in the restraining order shall preclude a party from using community property, quasi-community property, or the party’s own separate property to pay reasonable attorney’s fees and costs in order to retain legal counsel in the proceeding. A party who uses community property or quasi-community property to pay his or her attorney’s retainer for fees and costs under this provision shall account to the community for the use of the property. A party who uses other property that is subsequently determined to be the separate property of the other party to pay his or her attorney’s retainer for fees and costs under this provision shall account to the other party for the use of the property.

(3) Restraining both parties from cashing, borrowing against, canceling, transferring, disposing of, or changing the beneficiaries of any insurance or other coverage, including life, health, automobile, and disability, held for the benefit of the parties and their child or children for whom support may be ordered.

(4) Restraining both parties from creating a nonprobate transfer or modifying a nonprobate transfer in a manner that affects the disposition of property subject to the transfer, without the written consent of the other party or an order of the court.

(b) Nothing in this section restrains any of the following:

(1) Creation, modification, or revocation of a will.

(2) Revocation of a nonprobate transfer, including a revocable trust, pursuant to the instrument, provided that notice of the change is filed and served on the other party before the change takes effect.

(3) Elimination of a right of survivorship to property, provided that notice of the change is filed and served on the other party before the change takes effect.

(4) Creation of an unfunded revocable or irrevocable trust.

(5) Execution and filing of a disclaimer pursuant to Part 8 (commencing with Section 260) of Division 2 of the Probate Code.

(c) In all actions filed on and after January 1, 1995, the summons shall contain the following notice:

“WARNING: California law provides that, for purposes of division of property upon dissolution of marriage or legal separation, property acquired by the parties during marriage in joint form is presumed to be community property. If either party to this action should die before the jointly held community property is divided, the language of how title is held in the deed (i.e., joint tenancy, tenants in common, or community property) will be controlling and not the community property presumption. You should consult your attorney if you want the community property presumption to be written into the recorded title to the property.”

(d) For the purposes of this section:

(1) “Nonprobate transfer” means an instrument, other than a will, that makes a transfer of property on death, including a revocable trust, pay on death account in a financial institution, Totten trust, transfer on death registration of personal property, revocable transfer on death deed, or other instrument of a type described in Section 5000 of the Probate Code.

(2) “Nonprobate transfer” does not include a provision for the transfer of property on death in an insurance policy or other coverage held for the benefit of the parties and their child or children for whom support may be ordered, to the extent that the provision is subject to paragraph (3) of subdivision (a).

(e) The restraining order included in the summons shall include descriptions of the notices required by paragraphs (2) and (3) of subdivision (b).

Prohibited Actions

Some actions are prohibited entirely during the divorce process. The prohibited actions include cashing, borrowing against, canceling, transferring, disposing of, or changing the beneficiaries of any insurance or other coverage, including life, health, automobile, and disability, held for the benefit of the parties and their child or children for whom support may be ordered. See California Family Code Section 2040(a)(3), above.

Prohibited - Subject to Spousal Consent or Court Order

Some actions are prohibited unless the spouse consents or the court makes an order. These include transferring, encumbering, hypothecating, concealing, or in any way disposing of any property, real or personal, whether community, quasi-community, or separate (e.g., the making of a gift by one spouse), except in the usual course of business or for the necessities of life, and creating a nonprobate transfer or modifying a nonprobate transfer in a manner that affects the disposition of property subject to the transfer (e.g., changing beneficiary designations). See California Family Code Sections 2040(a)(2) and 2040(a)(4), above.

Allowed - Upon Notice to Spouse

Other actions are allowed so long as notice of the change is filed with the court and the spouse is provided with notice. These include the revocation of a nonprobate transfer, including a revocable trust, pursuant to the instrument and the elimination of a right of survivorship to property. See California Family Code Sections 2040(b)(2) and 2040(b)(3), above.

Allowed Without Restriction

A spouse may take the following actions without providing notice to the spouse or the court: (a) create, modify, or revoke a Will, (b) create an unfunded revocable or irrevocable trust, or (c) modify a nonprobate transfer in a way that does not affect the disposition of the property (e.g., modifying the successor Trustee provisions). See California Family Code Sections 2040(b)(1), 2040(b)(4), and 2040(a)(4), above.

Because of the restrictions involved, many couples who are going through the divorce process will often create an estate plan utilizing revocable living trusts, but wait to fund the trust until the divorce has been finalized.

A putative spouse is someone who you have a good faith belief that you are married to, but where the marriage is not legally valid.

Let's say for example, you go through the process of becoming married but for some reason your marriage certificate was never filed. Technically, the marriage is not legally valid, but you and your spouse thought that the marriage was valid. This is a situation where your spouse would be a putative spouse. Or, let's say for example, that you thought your prior divorce was complete (but it wasn't), and you later were legally married to someone else. Then your new marriage is not legally valid, and your new spouse is a "putative spouse".

The rights of a putative spouse can be tricky to determine. Ideally, if you find yourself in this situation, it should be dealt with before the death of either spouse. If there was a prior divorce that was not properly dissolved, it should be done so immediately. And, if your current marriage was defective because of some technicality, steps should be taken to make sure the marriage formalities are followed. Of course, this is often easier said than done, because oftentimes problems of this type never come to the forefront until after one of the spouses dies and someone from the past comes out of the woodwork.

Some court decisions have held that a "putative spouse" should be given the same rights as a legal spouse. Thus for example, he or she would be entitled to whatever a legal spouse would've been entitled to of your estate. However, other courts have taken a different approach when there was the presence of a surviving legal spouse, as well as a surviving putative spouse.

As a result, if you are in the process of getting married, be sure you get the proper documentation, including a validly filed marriage certificate, or if you're getting a divorce, make sure to obtain a final divorce decree from the court signed by the judge, so that there's no doubt in the future.

Divorce and re-marriage can have a significant affect on the estate plan you have in place.

First and foremost, in California, an "Automatic Temporary Restraining Order" is in effect during the marriage dissolution process. This generally hinders your ability to do estate planning as the law wants to avoid changes in your financial position during the pending divorce. 

Beneficiary Designations

If you designated your ex-spouse as a beneficiary of an asset with a beneficiary designation, for example, your retirement account, this designation is automatically revoked as a result of your divorce.

It's important to remember, however, that the divorce does not revoke the designation of your ex-spouse as the beneficiary of life insurance policies. It's therefore important to take stock of all of your assets and ensure that all beneficiary designation forms are properly updated during the estate planning process.

Remarriage

If you created an estate plan while you were single and then got married, your estate planning documents may be overridden at the time of your death, if your spouse survives you.

Your surviving spouse is entitled to the "statutory share" of your probate or trust estate. More details will be provided in another post; however, just note that if you have an existing estate plan and you get married, you must take steps to ensure that your estate plan will still be enforced despite your marriage. Most often, this can be a statement in your estate planning documents which states that you intend for your estate plan to be effective even though you recently were married.

Marriage brings with it many joys, but divorce is a precipitating event that forces many people to revisit the estate planning process. If you're going through a divorce, are contemplating divorce, or have completed a divorce, it's important to see what impact it may have on your estate plan.