What is "Gray Divorce" and How Does It Impact Your Estate Plan? Even though the overall rate of divorces has gone down in the la...

 

What is "Gray Divorce" and How Does It Impact Your Estate Plan?

Even though the overall rate of divorces has gone down in the last 20 years, there's a noticeable increase in divorces among older adults. The Pew Research Center says that for couples over 50, the divorce rate has doubled in the last 25 years.

Divorces among older couples, often referred to as "gray divorce" or "silver divorce," are becoming more common. This is happening because couples might drift apart once their adult children move out. People are living longer, so if they're not happy with their partner, they may decide to find a new path. Additionally, because women are now more financially independent, they have the freedom to live on their own.

While older adults might not have to deal with issues like child custody or child support, divorcing after a long marriage comes with its own set of challenges, especially when it comes to planning their estate. Here are some tips for what to do after the divorce settlement.

Update Any Estate Planning Documents

After a divorce settlement, some of your estate planning decisions may become void. For example, suppose you named your spouse as your healthcare proxy (who makes medical decisions on your behalf if you cannot). Once your spouse becomes your ex-spouse, your state may treat them as if they predeceased you. So you need to update your health care power of attorney to a new proxy.

Update Transfer-On-Death Accounts and Policies

Certain assets and property transfer outside your will, such as transfer-on-death (TOD) accounts and life insurance policies. These assets and policies go to the named beneficiary, and if your former spouse is still named, they will receive those assets and benefits.

• Bank Accounts, Retirement Accounts, and Pensions. These accounts have named beneficiaries, and you may want to update them. Regardless of any instructions in a will, the named beneficiary receives these assets and benefits once you die.
• Life Insurance. If you own a life insurance policy, check your beneficiary designation and update it if necessary. If your former spouse is the policy owner, you may be unable to change the beneficiary.
• Real Estate Held Jointly. Your divorce attorney may have settled any property division between you and your former spouse. However, check to ensure you do not hold property titles in both names as joint tenants with the right of survivorship. Otherwise, if you die before your former spouse, they will receive 100% of the real estate.
• Long-Term Care Policies. If you had a joint policy for long-term care, you might need to change the details of your long-term care planning and policy.

Choose new beneficiaries for your accounts, assets, and policies. It may be a good idea to make sure that any retirement benefits, social security benefits, or other benefits are not directed to your former spouse unless it is part of a divorce decree.

Additionally, check your health insurance. While not an asset, it is still essential to have. If you are on your spouse's policy, you may need to get your own health care plan.

Create a New Estate Plan

If you haven't created any estate planning documents, such as a will, power of attorney, health care directive or living will, now is the time to start.

• A will is a legal document that sets forth your instructions on who manages your estate (your personal representative), who receives your property (your beneficiaries), and who cares for your minor children (their guardian).
• A power of attorney allows you to name someone you trust to handle your financial affairs if you are unable to due to incapacity or even being unavailable. Your agent is your fiduciary and acts in your best interest. You decide what powers to give your agent and when their authority begins and ends.
• A living will or healthcare directives lets you name someone to make medical decisions on your behalf when you cannot. And you can give instructions about what life-prolonging treatments you want (or don't want) if you have an end-stage terminal illness.

You can create your customized estate plan with FindLaw's state-specific online forms or contact a local elder law or estate planning attorney to help you.

Even younger couples going through the divorce process benefit from looking at their estate plans and revising or creating new ones.