Gifts to Former Stepchildren

          In second marriages, it is common to find gifts to stepchildren, especially when the stepparent raised the stepchild during their minority and/or the stepparent has no other children of their own.  It is much less common, however, to find the parents of the stepparent naming the same stepchild as an alternative beneficiary to their own child; it is more natural that they would name another child or close family relative.    

          What effect does divorce — between a stepparent and the parent of a stepchild — have upon testamentary transfers from the stepparent or the stepparent’s own parents to a former stepchild?

          California law is very clear with respect to gifts made to an ex-spouse.  Under section 922 of California’s Probate Code all bequests by a decedent to his or her former spouse – contained in a testamentary instrument (i.e., a will, a trust or a death beneficiary form, such as for a life insurance policy) while the couple was still married — are treated as though the surviving ex-spouse had predeceased the decedent:  the former spouse fails to inherit, as would the former spouse’s own issue if the gift to the ex-spouse is, “by right of representation”. 

          So long as the status of the marriage was resolved by court order prior to the deceased spouse’s death, a surviving ex-spouse cannot claim any gifts made under the decedent’s will, trust or as a designated death beneficiary to any life insurance, annuity, or retirement account.  Exceptions exist, however, when the gift to an ex-spouse is reaffirmed after the divorce and also when the original document specifically provides that the gift should survives a future divorce.

          When marital dissolution proceedings were still ongoing when a spouse died, the court may sometimes retain jurisdiction to enter a nunc pro tunc (retroactive) court order.  That is, if either a status only judgment, as to the termination of the marriage has been entered, or the dissolution case was fully submitted – i.e., just awaiting a decision – then the family court retains jurisdiction.

          California’s Probate Code, however, is silent about whether gifts to stepchildren are nullified by the divorce when the gift instrument was signed by the stepparent prior to the divorce from the stepchild’s parent.

          California case law offers guidance as to how gifts to former stepchildren are treated.  In Estate of Hermon (1995), 39 Cal. App. 4^th, 1525, 1531, the Court of Appeal, First Appellate District, opined that, “… when a testator provides for his spouse’s children, he normally intends to exclude children of an ex-spouse after dissolution, unless a contrary intention is indicated elsewhere in his will. (Underlining added).”  

          Then in Estate of Jones (2004), 122 Cal. App. 4^th, 326, the Court of Appeal, Third Appellate District, reiterated the foregoing rule but said the Court could look beyond the instrument also and consider evidence of the deceased stepparent’s ongoing relationship with the stepchild after the divorce to see if the deceased former stepparent would likely have wanted the gift to the former stepchild.  Without evidence of an ongoing relationship, however, the Court in Estate of Jones presumed that the deceased former stepparent did not intend to provide for the children of his ex-spouse. 

          There is no case law speaking to gifts by grandparents to their children’s former stepchildren (“step grandchildren”).  Nonetheless, the foregoing analysis would logically appear to be relevant to such gifts.

          Uncertainties regarding gifts to former stepchildren, or former step grandchildren, are best addressed by the person who is making the gift, while still alive, proactively updating his or estate planning documents.  Even during a pending divorce, a stepparent can still make, or revise, a will.  The step grandparents have no restriction on updating their estate planning documents, while their child’s own divorce is pending, and so are free to address all gifts made by them to their son’s own stepchildren prior to the conclusion of the divorce.