How Does Gray Divorce Affect Your Estate Planning?

Any major change in your life should warrant an update in your estate planning, and divorce is no exception.

Getting divorced later on in life can have a significant impact on your finances. Although it is certainly true that divorce can alter your finances at any age, it is extremely important to consider how you’ll split your assets and any impacts this may have on your estate, especially if you are part of a blended family or have adult children. Gray Divorce is a term used to describe the growing number of older couples who contemplate getting a divorce. 

Getting divorced in your 50s, 60s or even 70s may dramatically alter not only your retirement plans and savings, but your overall financial and estate planning health. Meeting with a qualified financial adviser as soon as possible after deciding to get a divorce is a crucial first step in protecting your interests.

But you must from there go forward to meet with your estate planning attorney as well. If a substantial portion of your retirement or your estate planning strategy was based on being married to this person, and assets and properties you own together, you will need to make substantial changes to this plan in order to move forward.

Because there are so many potential alterations in your life at play with gray divorce, it is far better to work with an estate planning attorney and your financial advisor well in advance of actually filing for divorce. This gives you a good opportunity to plan for this transition and to avoid catastrophic financial consequences.

Meet with a Virginia Beach, VA estate planning lawyer to learn more about updating your plan to align with your new needs.

What You Need to Know About How Gray Divorce Can Impact Your Retirement Plans

At any point in your life, getting a divorce can have significant repercussions for the remainder of your life especially your finances. More couples are calling it quits as they get closer to moving into retirement, known as gray divorce.    
They may have gone through the process of raising children and then decide that they no longer want to be married. When facing retirement, which could mean up to another 30 years in the second season of their lives, some couples decide they would rather spend it on their own.
But retirement is often envisioned many years before as a life stage where a couple finally gets to spend time together. This parting of ways trend has led to an increase in divorce for people who are aged 50 or older known as gray divorce. In fact, it has roughly doubled since the 1990s and the divorce rate has tripled since 1990 for those individuals aged 65 and older.
This can endanger retirement savings for both parties since they may be living on half the income they had anticipated over the course of their life. Whatever money is inside individual retirement accounts, 401(k) plans, 403(b) accounts and pensions will typically need to be divided and this will come with an additional expense for legal costs. Consulting with an experienced attorney is one of the best ways to avoid these negative consequences and to understand the many ways that a gray divorce can affect your life. An estate planning revision may also be necessary after a divorce in this age.

Divorcing Older Couples Present Special Situations

Divorce can be a messy affair for couples of any age, but as a book published by the American Bar Association a few years ago points out, a break-up can be all the more complicated when it involves older people.

“Divorce in the Golden Years: Estate Planning, Spousal Support, and Retirement Issues for Clients at Midlife and Beyond,” written by Leslie Ann Shaner, covers the topic nicely.
“There can be many complications in handling the divorce of older clients, those that have had the chance to own a home, build retirement savings and have an investment portfolio,” according to the ABA’s website. “Because many of these couples have achieved some level of personal and financial security during the marriage, the lawyer is faced with a multitude of difficult and complex issues. And the number of these clients aged 45 and over will only grow: there are currently 80 million Baby Boomers, and they are indeed getting divorced. ‘Divorce in the Golden Years’ is a unique reference for the family lawyer that details how to handle the assets that a divorcing couple has accumulated while considering the special issues related to the age of the clients or the duration of their marriage.”
In the introduction to the book, Shaner, an attorney in Richmond, Va., points out that there are some very real challenges to handling such divorce cases.
“Not only are there financial complexities, many of these clients require additional time and attention to process the ramifications of these decisions,” the site noted. “Lawyers must also be prepared for a higher incidence of death in these clients, and because of this it is important to focus on what will happen to a couple’s assets upon one of the parties’ deaths either during or after divorce.”

Divorce Should Trigger Automatic Estate Update

Divorce is often the most major disruption people will experience in their lives.

It need not also disrupt things after their deaths.
“If you have just gotten divorced, you may be focused on getting on with your life,” notes a recent story in The Wall Street Journal by Liz Moyer. “But make sure you also have updated the financial arrangements that kick in at your death. Failure to do so, or to alert all relevant parties to the changes, could result in certain assets and benefits unintentionally going to your former spouse or his or her family upon your death.”
The story focuses on a specific example, that of a court case in New York involving a woman who died in 2009, two years after divorcing her husband.
“The family of Robyn Lewis, who died five years ago at the age of 43, is battling her former in-laws, who stand to inherit a $200,000 home in Clayton, N.Y., even though she and her husband divorced in 2007,” according to the story.
Robyn Lewis executed a will in 1996 in which she left everything to her then-husband with his father named as second beneficiary.
“While under New York law the divorce automatically cut her ex-husband out of her will, it didn’t cut out her father-in-law, who presented a copy of the 1996 will to the court,” Moyer writes. “Ms. Lewis, according to her family, wrote a new will after her divorce that changed the beneficiaries, but family members were unable to locate it to offer it as evidence.”
“The lesson is to stay on top of your estate plans,” Elizabeth Devillers Moeller, a lawyer at D.J. and J.A. Cirando in Syracuse, N.Y., the firm representing the Lewis family, was quoted as saying. “That means drafting a new will—and making sure that appropriate people have copies of the document or know where to find it.”
“The key is to make sure your estate planning documents, not only your will but also your power of attorney and health-care proxy, clearly reflect your intentions,” stated Julian Modesti, a lawyer at Syracuse firm Menter, Rudin and Trivelpiece who is representing Ms. Lewis’s former in-laws.