San Diego Estate Planning Lawyer Blog
Following a divorce there are a number of collateral issues you need to deal with. Among other matters, you may need to reconsider your estate planning situation. For example, if you and your former spouse created a living trust, you will probably want to revoke that trust and create a new separate trust.
Ex-Wife May Seek Removal of Ex-Husband From Children’s Trust
Of course, unwinding an estate plan is not always so simple, as a recent case from Los Angeles illustrates. This case involves a divorced couple who created an irrevocable trust during their marriage. While most estate planning trusts are revocable, irrevocable trusts are frequently used for legal and tax planning reasons.
Here, the couple’s irrevocable trust contained their marital home. The trust was to hold the property for the benefit of the couple’s three children. The father was named as the trustee.
Sometime after creating the irrevocable trust, the couple divorced. The mother then filed a petition to remove the father as trustee. She accused her ex-husband of “breach of fiduciary duty” with respect to the trust and asked she be named trustee instead. The father filed his own petition, denying the mother’s allegations and seeking to appoint a neutral third party to oversee the trust.
The probate court appointed a guardian ad litem to represent the children–the beneficiaries of the trust–and investigate the mother’s allegations. After the trustee reported back there was “zero evidence” the father mishandled trust assets, the mother requested a hearing to present additional evidence in support of her claims. The judge denied that request and dismissed the mother’s petition, asserting she lacked standing, particularly in light of the guardian ad litem’s role as a “referee” to protect the children’s interests.
But the California Second District Court of Appeal said the mother did have standing and was entitled to a hearing. Although the mother was no longer an “interested person” in the trust, California law clearly states that a “settlor”–the person who created the trust–has a legal right to seek the removal of a trustee. As it was “undisputed” the mother was a co-settlor of the trust with the father, her lawsuit could proceed.
Need Help Revising Your Estate Plan?
Ideally, disputes like the one above should be resolved as part of the divorce settlement process. It is often not necessary to wait until a divorce is final for individuals to make changes to their estate plan. Also keep in mind there are some issues, such as the division of retirement accounts and other community property, that must still be handled by the divorce court regardless of what your estate planning documents might say.
Divorce is not the only life-changing event you are likely to experience. If you have recently married, had another child, or acquired a significant amount of property, it may be time to revise your will or trust to reflect your new circumstances. Contact the Law Office of Scott C. Soady if you would like to consult with an experienced San Diego estate planning attorney today.