Hopefully, the answer that popped into your head was not “it’s complicated.”  But believe it or not, your status can be complicated when it comes to your estate plan.

When a couple gets married, the act of marriage itself effectively creates an estate plan for the newly married couple, whether they realize it or not.  Marriage also automatically alters any existing estate plan in significant ways.  If down the road, there is a divorce, this also changes any existing estate plan– but maybe not enough!

Regular readers of my column will know that in California, most good estate plans include a revocable trust to both avoid a trip to the Probate court and to provide good control for beloved Beneficiaries no matter their circumstances.  Estate plans also have wills, which serve as a back-up to the trust.

I also have to mention Community Property.  Community Property rules are historically a very progressive way of viewing marriage and property that we inherited from the Spanish via Mexico in the middle of the 19th Century.  Large Alta California landholders bargained with the US to keep Community Property rules.  The US, eyeing California’s natural resources readily agreed.

When you marry in California, a new ‘entity’ is formed which is the marital Community.  Assets I bring to the marriage remain my own “separate property” (unless I give them to the Community), but assets my spouse and I acquire together while married now belong to the Community.  If there is no premarital agreement, my and my spouse’s income are also the property of the Community.

If no previous estate plan is in place, a new one is created by the act of marriage.  That estate plan dictates that my spouse is now entitled to receive significant portions (if not all) of my separate property and all of my share of our Community property.  This may or may not be what you or your spouse want.

Even if you already have an estate plan, the law presumes that you did not mean to leave out your spouse, and he or she is entitled to special shares of the entire estate as an ‘omitted spouse.’  

When you marry, special retirement assets that are covered by the Federal ERISA laws (including 401(k) and 403(b) plans, but NOT IRAs) have the beneficiary designations automatically changed.  The short version is, while you are married, the ERISA rules say your spouse must inherit (e.g., be the beneficiary of) 100% of your ERISA plan; and this can only be altered with that spouse’s consent.

When divorce occurs and ends the existence of the marital Community, if you had a trust (especially a joint trust), your former spouse is not automatically disinherited!  The trust needs to be altered or revoked.  Your trust often holds a very large majority of your assets, and we frequently have divorced clients who come in to update their estate plans and did not realize that their assets would still have transferred to their former spouse prior to the update.

Let’s look at an example.  Say I’m going into my second marriage and I have two children from a previous marriage.  Further, I have a 401(k) plan at work with $500,000 in it.  Prior to my marriage, I named my children as equal beneficiaries, and my desire is to keep this designation so my children inherit.  Once I remarry, unless I re-designate my children as my beneficiaries and get my new spouse’s signature to release interest, my new spouse becomes the 100% beneficiary of that 401(k).

Remember that when you neglect to plan ahead, things can get complicated.  Marriage and divorce are just some of the life events that are also estate planning events.  You have to know what your options are, and you will have to alter or create an estate plan to match your desires.  With the help of a good family law attorney like my fellow contributor Barbara McNamara, my office is equipped to help you stay informed and adjust your estate plan to match your circumstances.  Don’t get caught by surprise.  When you start your future, make sure to plan for it.