Estate Planning and Dissolution:
What are ATROS and Why Can’t I Fund My Trust?
When a married couple starts a divorce or legal separation in California, the Summons served with the Petition in dissolution of marriage or legal separation contains Automatic Temporary Restraining Orders (referred to as “ATROs”) that are binding on both spouses. The purpose of the ATROS under California Family Code section 2040 is to preserve the status quo of the marital estate while the matter is pending, including insurance coverage and beneficiary designations. You should read the ATROs carefully upon receipt and consult an attorney if you have any questions regarding the impact of the orders on any changes you want to make to your estate plan.
The ATROS impose some limitations on your estate planning options and require certain procedural steps involving advance notification to the other party or consent of the other party for certain actions. These restrictions remain in effect until a final judgment is entered, the petition is dismissed, or there is a Court order for termination. The remainder of this blog addresses the specific issue of what you can and cannot do regarding a revocable trust.
Under the ATROS, both spouses are restrained from creating a nonprobate transfer or modifying a nonprobate transfer in a manner that affects the disposition of property subject to the transfer, without the written consent of the other party or a court order.
However, there are some exceptions for estate planning purposes:
- You may create, modify, or revoke a will or create an unfunded revocable or irrevocable trust without the consent of your spouse or providing him or her any advance notice.
- You also may revoke a nonprobate transfer such as a revocable trust. However, you must revoke the trust in accordance with the requirements of the trust instrument and provide notice of the change before the change takes effect by serving notice on the other party and filing the notice and a proof of service with the court.
Because of these rules, the only way you will be able to complete a funding transfer to a trust during a dissolution proceeding is with the consent of your spouse or by obtaining a court order.
Because most individuals contemplating a dissolution or legal separation will not want the other spouse to receive any interest in their share of the community property or separate property, it is highly recommended to consult with an estate planning attorney when a dissolution or legal separation is being contemplated or has started. If the couple has a joint trust, it may be time to revoke the existing trust and set up a new individual estate plan with different fiduciary and beneficiary designations. Each individual estate planning situation requires an independent analysis of the specific facts and circumstances involved. [Disclaimer]
Our estate planning team at Naimish & Lewis can advise you on the impacts of dissolution and legal separation on your estate plan. To schedule an initial consultation with an attorney at our firm, please contact us.