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Reed: ‘Gray divorce revolution’ alters traditional estate planning

July 16, 2014
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By James A. Reed

Americans over the age of 50 are getting divorced at a record rate – doubling since 1990. Sociologists have coined the term “gray divorces” to describe this phenomenon. Some estimate that by the year 2030 there will be 800,000 gray divorces annually. These statistics are so significant that social commentators are calling this a “gray divorce revolution.”

In a gray divorce, each spouse often leaves the marriage with a grouping of assets unlike members of any other age group getting divorced. The family situation has changed dramatically – children are now adults and through college, many married and with children. The “gray divorcees” are in the midst of a completely changed or changing lifestyle. At this age there is less time to make any kind of financial rebound because the remaining time for significant earnings is short. The financial planning previously done for the joint husband and wife retirement is out the window or under serious renovation. Estate planning for “us” is now estate planning for “me.”

Estate planning for “gray divorcees” presents unique challenges for their legal and financial planning professionals. Hopefully, your client has involved a skilled financial advisor during the divorce. That advisor can provide invaluable counsel when figuring out what assets are better to take in the property settlement. They also can work with the client to develop a realistic budget for upcoming living expenses. I have found that in these divorces, regardless of the amount of assets, it often still makes good sense (financially and emotionally) to continue employment or obtain employment for the next several years. The longer a client can delay relying heavily on their assets to pay their bills, the better.

Divorce, especially gray divorce, forces a client to answer big questions like, “What in my life is most important to me?” or “What values do I hold most dearly?” or “What do I want my life to be and be about?” Many couples at this age have already been active in philanthropic efforts. The couple may have already established a family foundation or charitable fund. Does the client still value these specific efforts or move in a different direction individually? The estate planning objectives need to align with the answers to those questions and many others. Exploration and assessment are big parts of the client’s overall planning experience.

I advise clients to consider interim estate planning to cover the time before the divorce is final. At the time of the divorce, the estate planning with the gray divorcee basically starts from scratch. If not done already, the client needs an immediate inventory and review of all existing planning documents, especially any powers of attorney granting the former spouse legal authority or health care decision-making. Should the client’s child or children be placed in the roles of personal representative, contingent trustee of the client’s revocable trust, health care decision-maker, and attorney-in-fact possessing full legal authority? Is that child prepared and capable of acting in these critical roles? Does that child fully understand the parent’s wishes and honor the parent’s plans? The considerations involved in this decision-making process often provide a completely new parent/child relationship dynamic.

When married, spouses typically planned on each being available to care for or manage the care of the other if needed. After a divorce, planning for one’s own care is critical. What is the plan for temporary care in case of an accident or sudden illness? Do the legal documents and established plan allow for someone to manage the client’s affairs while incapacitated? Is long-term care insurance a viable option and a wise purchase?

Life insurance is something that is often overlooked in post-divorce planning. If your client has little or no life insurance coming out of the divorce, you should consider how and if life insurance needs to be a part of the plan. I often see so-called “second to die” life insurance policies in gray divorces. Typically, the “second to die” policy does not pay when the first spouse dies, and only pays upon the death of the second. Once divorced, the former spouses may no longer have a common interest in where the proceeds should go. Or, there may be a trustee of an irrevocable trust holding title to the policy with the proceeds funding the trust. Whatever the circumstances, a careful review of life insurance is part of the planning process.

It is not unusual for gray divorcees to find themselves involved in a subsequent committed relationship. A premarital agreement will allow your client to protect assets and define financial responsibilities in the event of a divorce. Also, a premarital agreement will allow your client to control the ultimate disposition of his or her assets at death. For those looking at a non-marital living together relationship, a cohabitation or “no nup” agreement may be advisable. Both agreements can avoid unintended consequences which may be imposed by law without a clear contract.

Estate planning with the gray divorcee client requires a thoughtful and deliberate approach to the unique circumstances these clients present. It is a time of significant life transition and exploration. Even once a plan is in place, these clients require more frequent review and possible plan adjustments than do your more traditional planning clients.•

__________

James A. Reed–jreed@bgdlegal.com–is a partner at Bingham Greenebaum Doll LLP. Reed focuses his practice on the legal aspects of relationship transitions of all types. Reed is a fellow of the American Academy of Matrimonial Lawyers. The opinions expressed are those of the author.

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  1. I have been on this program while on parole from 2011-2013. No person should be forced mentally to share private details of their personal life with total strangers. Also giving permission for a mental therapist to report to your parole agent that your not participating in group therapy because you don't have the financial mean to be in the group therapy. I was personally singled out and sent back three times for not having money and also sent back within the six month when you aren't to be sent according to state law. I will work to het this INSOMM's removed from this state. I also had twelve or thirteen parole agents with a fifteen month period. Thanks for your time.

  2. Our nation produces very few jurists of the caliber of Justice DOUGLAS and his peers these days. Here is that great civil libertarian, who recognized government as both a blessing and, when corrupted by ideological interests, a curse: "Once the investigator has only the conscience of government as a guide, the conscience can become ‘ravenous,’ as Cromwell, bent on destroying Thomas More, said in Bolt, A Man For All Seasons (1960), p. 120. The First Amendment mirrors many episodes where men, harried and harassed by government, sought refuge in their conscience, as these lines of Thomas More show: ‘MORE: And when we stand before God, and you are sent to Paradise for doing according to your conscience, *575 and I am damned for not doing according to mine, will you come with me, for fellowship? ‘CRANMER: So those of us whose names are there are damned, Sir Thomas? ‘MORE: I don't know, Your Grace. I have no window to look into another man's conscience. I condemn no one. ‘CRANMER: Then the matter is capable of question? ‘MORE: Certainly. ‘CRANMER: But that you owe obedience to your King is not capable of question. So weigh a doubt against a certainty—and sign. ‘MORE: Some men think the Earth is round, others think it flat; it is a matter capable of question. But if it is flat, will the King's command make it round? And if it is round, will the King's command flatten it? No, I will not sign.’ Id., pp. 132—133. DOUGLAS THEN WROTE: Where government is the Big Brother,11 privacy gives way to surveillance. **909 But our commitment is otherwise. *576 By the First Amendment we have staked our security on freedom to promote a multiplicity of ideas, to associate at will with kindred spirits, and to defy governmental intrusion into these precincts" Gibson v. Florida Legislative Investigation Comm., 372 U.S. 539, 574-76, 83 S. Ct. 889, 908-09, 9 L. Ed. 2d 929 (1963) Mr. Justice DOUGLAS, concurring. I write: Happy Memorial Day to all -- God please bless our fallen who lived and died to preserve constitutional governance in our wonderful series of Republics. And God open the eyes of those government officials who denounce the constitutions of these Republics by arbitrary actions arising out capricious motives.

  3. From back in the day before secularism got a stranglehold on Hoosier jurists comes this great excerpt via Indiana federal court judge Allan Sharp, dedicated to those many Indiana government attorneys (with whom I have dealt) who count the law as a mere tool, an optional tool that is not to be used when political correctness compels a more acceptable result than merely following the path that the law directs: ALLEN SHARP, District Judge. I. In a scene following a visit by Henry VIII to the home of Sir Thomas More, playwriter Robert Bolt puts the following words into the mouths of his characters: Margaret: Father, that man's bad. MORE: There is no law against that. ROPER: There is! God's law! MORE: Then God can arrest him. ROPER: Sophistication upon sophistication! MORE: No, sheer simplicity. The law, Roper, the law. I know what's legal not what's right. And I'll stick to what's legal. ROPER: Then you set man's law above God's! MORE: No, far below; but let me draw your attention to a fact I'm not God. The currents and eddies of right and wrong, which you find such plain sailing, I can't navigate. I'm no voyager. But in the thickets of law, oh, there I'm a forester. I doubt if there's a man alive who could follow me there, thank God... ALICE: (Exasperated, pointing after Rich) While you talk, he's gone! MORE: And go he should, if he was the Devil himself, until he broke the law! ROPER: So now you'd give the Devil benefit of law! MORE: Yes. What would you do? Cut a great road through the law to get after the Devil? ROPER: I'd cut down every law in England to do that! MORE: (Roused and excited) Oh? (Advances on Roper) And when the last law was down, and the Devil turned round on you where would you hide, Roper, the laws being flat? (He leaves *1257 him) This country's planted thick with laws from coast to coast man's laws, not God's and if you cut them down and you're just the man to do it d'you really think you would stand upright in the winds that would blow then? (Quietly) Yes, I'd give the Devil benefit of law, for my own safety's sake. ROPER: I have long suspected this; this is the golden calf; the law's your god. MORE: (Wearily) Oh, Roper, you're a fool, God's my god... (Rather bitterly) But I find him rather too (Very bitterly) subtle... I don't know where he is nor what he wants. ROPER: My God wants service, to the end and unremitting; nothing else! MORE: (Dryly) Are you sure that's God! He sounds like Moloch. But indeed it may be God And whoever hunts for me, Roper, God or Devil, will find me hiding in the thickets of the law! And I'll hide my daughter with me! Not hoist her up the mainmast of your seagoing principles! They put about too nimbly! (Exit More. They all look after him). Pgs. 65-67, A MAN FOR ALL SEASONS A Play in Two Acts, Robert Bolt, Random House, New York, 1960. Linley E. Pearson, Atty. Gen. of Indiana, Indianapolis, for defendants. Childs v. Duckworth, 509 F. Supp. 1254, 1256 (N.D. Ind. 1981) aff'd, 705 F.2d 915 (7th Cir. 1983)

  4. "Meanwhile small- and mid-size firms are getting squeezed and likely will not survive unless they become a boutique firm." I've been a business attorney in small, and now mid-size firm for over 30 years, and for over 30 years legal consultants have been preaching this exact same mantra of impending doom for small and mid-sized firms -- verbatim. This claim apparently helps them gin up merger opportunities from smaller firms who become convinced that they need to become larger overnight. The claim that large corporations are interested in cost-saving and efficiency has likewise been preached for decades, and is likewise bunk. If large corporations had any real interest in saving money they wouldn't use large law firms whose rates are substantially higher than those of high-quality mid-sized firms.

  5. The family is the foundation of all human government. That is the Grand Design. Modern governments throw off this Design and make bureaucratic war against the family, as does Hollywood and cultural elitists such as third wave feminists. Since WWII we have been on a ship of fools that way, with both the elite and government and their social engineering hacks relentlessly attacking the very foundation of social order. And their success? See it in the streets of Fergusson, on the food stamp doles (mostly broken families)and in the above article. Reject the Grand Design for true social function, enter the Glorious State to manage social dysfunction. Our Brave New World will be a prison camp, and we will welcome it as the only way to manage given the anarchy without it.

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