Gray Divorce and Estate Plan

Sometimes referred to as “gray divorce,” people aged 50 and older are divorcing in ever-increasing numbers. In fact, according to the CDC, in 2017 the average divorce rate was 2.9 divorces for every 1,000 Americans, dropping from 4.7 per 1,000 Americans in 1990. Older adults, however, are divorcing at much higher rates; in 2005, the divorce rate for American aged 50 and older was 5 per 1,000 Americans. By 2015, this rate had doubled.

The reasons for this are debatable, but include increased financial independence in women, divorce becoming more socially acceptable, and changing relationships as children age and move out of their parents’ homes. Regardless of the reasoning, this trend, combined with longer life expectancy and skyrocketing healthcare costs, changes how estate planning must be approached, particularly as both partners have fewer earning-years left and retirement planning must be considered very carefully.

According to survey by TD Wealth, 40% of estate planners and attorneys report that gray divorce is causing a rise in family conflict. Retirement planning and funding is, naturally, a large factor in estate planning, but even more of an issue when divorce is involved.

Several specific estate planning documents must be reviewed and updated in the event of a divorce, including

  • Health care proxies, which determine who can make healthcare decisions for you if you are medically incapacitated;
  • Powers of attorney, which are documents used to appoint someone to make decisions on your behalf;
  • Guardianship appointments, and;
  • Wills, especially bequests to your ex-spouse in your will, and naming your ex-spouse either executor or administrator.

Beneficiary designations on insurance, retirement accounts, and pensions should be reviewed and updated pursuant to the terms of the divorce once it is finalized.

Trusts should also be reviewed, and trustees reviewed and considered. If there is a trust for minor children, should the ex-spouse continue to be the named trustee?

Divorce is rarely simple, and neither is estate planning. When the two are combined, it can be exponentially more confusing and difficult, particularly because emotions and conflict are heightened in both circumstances. Add to that complex tax laws around estates and trusts, rules around beneficiary designations (for example, you usually cannot change a beneficiary designation mid-divorce), health care planning, and retirement care planning, it can feel impossible.

The kindest thing you can do for yourself and your family in the event of a divorce and needing to adjust or create your estate plan is to make sure you are advised by competent counsel who understands the issues. Contact us today.