WILL MY SPOUSE TAKE MY INHERITANCE IN A DIVORCE?

So, Great Aunt Martha left you the vineyard and now your spouse wants her half so she can take that Maui vacation she always wanted…with her new boyfriend.

I have good news and bad news.

It is a beautiful sunny day here in Santa Cruz so we’ll start with the good news:

In California an inheritance is classified as “separate property” and not “community property.”  Community property is shared equally by the spouses and, for the most part, divided equally in a divorce.  Separate property belongs to the spouse that owns it and is technically not subject to division in divorce.   But lawyers have to make their money and in divorce all of the fun is in picky exceptions and creative reimbursement strategies.  (Any lawyer who tells you that the fun part is figuring out the least painful way to divide the kids time between two houses is clearly not me.)

Speaking of me, here is the part where I go into a tangent where I try to make my childhood memories relevant to your question.

IS YOUR TRUST A TICKING TIME BOMB?

When the question is whether or not a trust is up to date the answer can be complicated because so much of that depends on what has changed in your life recently.  However, a huge change in the law has left ticking time bombs in the hands of many unsuspecting people and I’ve decided that it is important enough to step outside of my usual format so you can be made aware of the problem:

WHAT IS A TRUST?

I’m sure I don’t have to tell you that trust is a beautiful, delicate thing.  It is built, brick by brick, interaction by interaction, into a foundation strong enough to hold higher levels of interactions in the future but, like a Jenga game, one poor decision can cause it all to come crashing down.

That’s trust and it is definitely related to what you are doing when you enter into a “trust agreement,”  but it isn’t the whole story.

But first, a little background:

YEA! I FINALLY HAVE A TRUST! AM I DONE?

According to several polls less than half of Americans have an estate plan so congratulations on getting the first step done.  Putting your affairs in order is a very loving thing for you to do for your heirs and yourself (in the case of your incapacity) and I want to encourage you to finish the job.  Hopefully you went to a qualified attorney instead of some trust mill, but either way the chances that you are done are, unfortunately, slim.  If you have a revocable living trust-based estate plan (as opposed to a will-based estate plan) then what you have paid for is a (hopefully) beautiful (hopefully) complete intention.  Acting on that intention is the next step.

SHOULD I USE ONLINE LEGAL FORMS?

I think everyone should use a qualified lawyer for every legal decision in their lives, without exception.


The idea of my dear readers walking through their day without an attorney there to point out all of the little legal potholes of life is terrifying!


However, I started this blog because I know lawyers are expensive (law school is expensive, malpractice insurance is expensive, running an office is expensive, mandatory continuing legal eduction is expensive) and you need, you deserve inexpensive access to law. (I also think you deserve inexpensive access to medicine but, really, what do I know, I’m just some liberal from California who should probably be charging more for her services.)

WHAT IS PROBATE?

In the most simplest terms, probate is a court-supervised process for transferring a deceased person’s assets to the beneficiaries listed in his or her will. Typically, the executor named in your will would start the process after your death by filing a petition in court and seeking appointment. Your executor would then take charge of your assets, pay your debts and, after receiving court approval, distribute the rest of your estate to your beneficiaries. If you were to die intestate (that is, without a will), a relative or other interested person could start the process. In such an instance, the court would appoint an administrator to handle your estate. “Personal representative" is another term used to describe the administrator or executor appointed to handle an estate.


Simpler procedures are available for transferring property to a spouse or for handling very small estates.

DO I REALLY NEED ESTATE PLANNING IF I’M HAPPY TO LEAVE EVERYTHING TO MY SPOUSE AND CHILDREN?

State law provides a set of rules that apply when someone dies without a Will. In California, when a married person dies without a Will their “community property” (marital assets) will go to their spouse and their “separate property” (assets that belong to only them) will be divided 1/2 to their spouse and 1/2 to the child (2/3 to the children if there are more than one). Sounds great right? Who needs to write up a Will, or even worse, pay a lawyer thousands of dollars to do an “estate plan” when they’re happy enough to have the default apply?


Well, my friends, the devil is in the details with this one and when I mean details, I mean YOUR details. Your details may be pretty today. Let’s say (just for kicks) that you’re the "typical" American family: 2 healthy married adults madly in love, 2.5 cute kids with no disabilities (for now we’re going to say that your son’s unquenchable potty mouth is not early onset tourettes), a house with a white picket fence and no termites, and some big, fluffy, friendly-type dog that doesn’t shed but might lick you to death. Sound like you so far?