San Diego Estate Planning Lawyer Blog
Divorce complicates estate planning, especially when one or both former spouses decide to re-marry. If questions over community property linger from the first marriage, they can spill over into probate court should either party die. A recent case from the California Court of Appeal, discussed here for informational purposes only, shows just how complicated remarriage can be with respect to probate and estate planning.
Burwell v. Burwell
Gary Burwell purchased a term life insurance policy in 1996 on his own life, naming his then-wife, Becky Burwell, as the beneficiary. In 2004, Becky Burwell sued her husband for divorce. In serving her husband, a number of restraining orders took effect, including one preventing Gary Burwell from changing his life insurance policy or disposing of any property via will or trust. These orders were meant to conserve the Burwells’ community property until their divorce became final.
In August 2005, the court granted the Burwells a “status only” divorce judgment. This legally dissolved the marriage without resolving other issues including the division of property. While the now-divorced Burwells continued to resolve those issues, Gary Burwell married his second wife, Cynthia Burwell, in 2006.
It was not until August 2008 that Gary and Becky Burwell resolved some, but not all, of their property issues. Two months later, Gary Burwell changed the beneficiary on his 1996 life insurance policy from Becky Burwell to Cynthia Burwell. Gary Burwell had omitted this insurance policy in the property disclosures made to his ex-wife as part of their divorce proceedings.
Gary Burwell committed suicide in April 2010. Becky Burwell filed a civil suit to prevent Cynthia Burwell from collecting on the 1996 life insurance policy. Becky Burwell argued she was entitled to the proceeds from the policy. She argued Gary Burwell’s 2008 change of beneficiary violated the terms of the initial restraining order that in effect since the divorce case began. She also said her ex-husband’s failure to disclose the policy remained active violated state divorce law. Finally, she said the policy remained “community property” under the partial 2008 settlement, so she was at least entitled to half of the proceeds.
The trial court agreed with Becky Burwell and ordered half of the insurance policy be paid out to her as her share of community property. The remaining half was assigned to Gary Burwell’s estate, where Becky Burwell might have a claim as a creditor. Cynthia Burwell appealed this decision. Becky Burwell also appealed, claiming she was entitled to 100% of the insurance proceeds outright.
Ultimately, the court of appeal determined the trial court needed to do some more work. The factual record created by the trial court did not give the appeals court a clear “characterization” of the disputed insurance policy as either community property or the late Gary Burwell’s separate property. The appeals court vacated the trial court’s earlier decision declaring the policy community property and returned the case so that additional evidence could be submitted.
Dealing With Divorce and Remarriage
As with any major life event, divorce or remarriage should prompt a complete review of your California estate planning needs. An experienced estate planning attorney can advise you on the best way to amend your estate plans to ensure there is no confusion among current and former spouses. Contact the Law Office of Scott C. Soady in San Diego if you have any questions.