Estate Planning During Divorce: What Mediation Clients Need to Know

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When going through a divorce, there’s often a lot to juggle—emotionally, legally, and financially. One critical aspect that sometimes gets overlooked is estate planning. Even though your marriage is coming to an end, legally, you're still considered married until the divorce is finalized. This means that if something happens to you during the divorce process—such as death or incapacity—your spouse may still have legal rights to your assets or decision-making authority unless you take proactive steps.

Automatic Temporary Restraining Orders (ATROs) and What They Mean

Once you file for divorce, Automatic Temporary Restraining Orders (ATROs) go into effect. These orders are designed to maintain the status quo and prevent either spouse from making drastic changes to their financial situation without the other’s consent. However, ATROs also limit your ability to make changes to your estate plan, such as altering beneficiary designations or transferring assets into a trust.

Here’s a breakdown of what you can and cannot do during this period:

Actions You Can Take Without Restrictions
Even with ATROs in place, you still have the freedom to:

  • Create, modify, or revoke a will: A will outlines how your property will be distributed upon your death. It can be created or changed at any time during your divorce.

  • Create a trust: You can establish a new trust to protect your assets, but without written consent from your spouse, you won’t be able to transfer assets into the trust until after the divorce is finalized.

Actions That Require Notification (But Not Consent)
There are certain estate planning steps that require you to notify your spouse, but do not need their consent:

  • Revoke a revocable trust: If you have an existing revocable trust that benefits your spouse, you can revoke it with notice to them.

  • Sever a joint tenancy: If you hold property jointly with your spouse (joint tenancy with right of survivorship), you can sever this agreement to prevent your spouse from automatically inheriting your share of the property if you pass away.

Actions That Require Written Consent from Your Spouse
Some actions require more than just notice—they need written permission from your spouse:

  • Change beneficiary designations: For assets like life insurance policies or retirement accounts, you cannot change the beneficiary from your spouse to someone else without their consent.

  • Fund a new trust: Even if you create a new trust, funding it (transferring assets into it) requires written consent from your

Divorce can take months or even years to finalize, leaving your estate in a vulnerable position. Here are some things to consider:

Death During Divorce
If you pass away before your divorce is finalized and without an updated estate plan, your spouse may still inherit your assets according to the laws of intestacy. This means that without a will or trust, most of your community property and potentially a share of your separate property could pass to your spouse—even if you were in the process of dissolving your marriage.

Incapacity During Divorce
If you become incapacitated and do not have a durable power of attorney or healthcare directive in place, a court-appointed conservator may take control of your affairs. To avoid this, you can designate someone you trust to make financial and medical decisions for you while the divorce is ongoing.

  1. Revocation of Estate Plans Upon Divorce
    Once your divorce is finalized, any estate plan that designates your ex-spouse as a beneficiary—such as a will, trust, or life insurance policy—will be automatically revoked by law. However, until that legal termination is complete, your current estate plan remains in effect. It’s important to address this as soon as possible to ensure your wishes are followed.

  2. ERISA and Retirement Accounts
    If you have retirement assets like a 401(k) or 403(b), the Employee Retirement Income Security Act (ERISA) requires spousal consent for you to designate anyone other than your spouse as a beneficiary. You can revoke the existing beneficiary designation, but you’ll need your spouse’s written consent to name a new beneficiary.

  3. Handling Joint Tenancy and Non-Probate Transfers
    Joint tenancy and other non-probate transfers (such as life insurance or transfer-on-death accounts) can be revoked, but you cannot name new beneficiaries or change ownership of these assets without spousal consent during the divorce process.

  4. Durable Powers of Attorney and Health Care Directives
    Upon finalization of your divorce, any durable powers of attorney or healthcare directives that name your ex-spouse as your decision-maker will be automatically revoked. Until then, those documents remain valid, and your ex-spouse could have legal authority over your financial and medical decisions.

To avoid unintended outcomes during divorce, it's critical to revisit your estate plan early in the process. If you don’t already have an estate plan, now is the time to create one. If you have an outdated plan that names your spouse as a beneficiary or decision-maker, updating your documents will ensure that your wishes are followed in the event of your death or incapacity.

By addressing estate planning in mediation, you can safeguard your future and ensure that your assets and health care preferences are in line with your current life circumstances.