Why should estate planners and other practitioners keep up with important changes in the Family Code? In short, because you may run into aspects of it in a wide range of circumstances that could have serious impacts on your clients.
Case in point: California Family Code Section 771 states that earnings and accumulations of a spouse while living “separate and apart” are the separate property of the earning spouse. While the definition seems straightforward, how courts have determined whether spouses are living “separate and apart” is not.
In 2015, the California Supreme Court in Marriage of Davis (2015) 61 Cal.4th 846 held that living “separate and apart” occurs when either spouse intends to cease normal marital relations and acts consistently with that intent. The legislature clarified this definition last year by enacting Family Code section 70, which requires a spouse to express to the other his or her intent to end the marriage. This provision went into effect on January 1 of this year.
While not all estate planning attorneys need to become experts in family law, it is important that they are aware of nuances such as these that may impact their clients.
What this means is that spouses are only considered to be living “separate and apart” if one spouse states openly to the other that he or she intends to end the marriage. The courts, in essence, can’t draw that conclusion on their own based on the spouse’s actions alone.
So what does this mean for estate planners? There may be a client who contends he acquired certain property after separating from his spouse and therefore wishes to leave it to someone else. The beneficiary or trustee of his trust may run into trouble when, after the client passes away, the spouse claims an interest in the property. Similarly, a real property attorney representing a client in transferring property he claims he acquired after he separated from his spouse should be aware of the potential community property claim if the client never expressed his intention to end the marriage. Oversights like these can open the door to expensive litigation.
While not all estate planning attorneys need to become experts in family law, it is important that they are aware of nuances such as these that may impact their clients. The value in doing so can be significant to their clients’ beneficiaries and trustees. It may, in fact, be critical in ensuring intended beneficiaries don’t part unnecessarily with more of their family member’s legacy than needed.