Does ‘Gray Divorce’ Fit into Estate Planning?
According to the Pew Research Center, the divorce rate has more than doubled for people over 50 since the 1990s. The Pandemic is also adding to the uptick, says AARP’s recent article entitled “Getting Divorced? It’s Time to Update Your Caregiving Plan.”
A divorce can be financially draining. Moreover, later-in-life divorces frequently impact women’s finances more than men’s. That is because in addition to depressed earnings from time spent out of the workforce raising children, women find themselves more financially vulnerable post-divorce and more likely to serve as caregivers again in the future. Even so, for partners of all genders, it is important to consider the longer-term financial outlook, not just the financial situation you’re in when you are actually dissolving the marriage.
You and your spouse will be dividing assets and liabilities and the responsibilities regarding spousal support. How one of you will live if the other gets sick or passes away should also be part of this conversation.
Consider where you’ll need to make changes. One may be removing your spouse from beneficiary designations on all your accounts. Your divorce agreement may also include buying life insurance or maintaining a trust or beneficiary designations for one another.
Create or update your estate plan immediately. You should also ask your estate planning attorney to review your marital agreement. They will have suggestions about how to align your estate plan with your divorce obligations. If you and your ex are co-parenting children, your estate plan should address who their guardians will be, if both biological parents pass away. It is also important to address who will manage any inheritance, if you don’t want your ex-spouse handling assets you may leave to your children.
Create your life care plan, which means naming health care proxies or surrogates (who will take care of your medical affairs, if you’re in need of caregiving), designating a financial power of attorney (who will take care of your finances and legal affairs), and naming a guardian for yourself if you’re incapacitated.
Consider the way in which your divorce will impact your children and extended family if you need caregiving. At a minimum, agree between yourselves what level of contact you can manage and, if you share children and loved ones, know that your lives will cross along the way.
If you have minor children under age eighteen (18) under your care – either children or grandchildren – when it comes to your assets to be inherited by these children, you should review with your attorey whether you will want your ex-sposue to manage the assets on behalf of these children. If you don’t, it is important to establish a trust under which you name your own trustee to manage those assets (at least until the children are eighteen (18), if not even later).
While your marriage may not last, the connections will, so make a wise plan.
BOOK A CALL with me, Ted Vicknair, Board Certified Estate Planning and Administration Specialist, Board Certified Tax Law Specialist, and CPA to learn more about estate planning, incapacity planning, and asset protection.
If you liked this article, “Does ‘Gray Divorce’ Fit into Estate Planning?” read also these additional articles: What Do I Need to Do Right after Spouse Dies? and Can a Family Limited Liability Company Reduce Estate Taxes? and Should I have a Pour-Over Will? and How Do I Find a Great Elder Law Attorney?
Reference: AARP (Jan. 25, 2022) “Getting Divorced? It’s Time to Update Your Caregiving Plan”