A recent study by TD Wealth found that a trend known as “gray divorce,” the increasing rate of those over 50 years old divorcing, is impacting estate planning, coupled with prolonged life expectancy and rising healthcare costs.
“In addition to prolonged life expectancy and rising healthcare costs, this upward trend around couples divorcing over the age of 50 has created a recent swirl among the estate planning industry,” says Ray Radigan, Head of Private Trust at TD Wealth. “Gray divorce is adding another layer of complexity to the estate planning process that already arises with blended families, designation of heirs and the ever changing domestic structures. As a result, it’s more important than ever to proactively review and discuss the estate plans with our clients and their families on an ongoing basis.”
Furthermore, 39% of survey respondents identified retirement planning and funding as a highly impacted factor of estate planning for those divorcing over the age of 50. Gray divorce is also having an impact on determining who will be responsible for enacting power of attorney (7%), determining appropriate social security benefits (6%), and drafting of a will (5%).
In addition to the impact of gray divorce, the TD Wealth survey also explored the more traditional causes of family conflict when engaging in estate planning and found that not communicating the estate plan with family members is the most common cause of conflict (43%), followed by dealing with blended families (29%). Only 13% of respondents cited designation of beneficiaries as a cause for conflict in 2020, compared to 30% in 2019.
Pew Research Center shows that remarriages after gray divorces are on the rise too. 40% of new marriages are now remarriages and half of previously married seniors have remarried again. It’s important to remember when you divorce or get remarried, you need to update your estate documents to reflect your new situation. Your current estate planning documents don’t automatically update with your life changes. You need to update them personally, with an attorney. At a minimum, we recommend changing your beneficiaries found in your estate plan to cover your updated heirs properly. If you fail to change the beneficiary, your assets may not go to whom you think.
Please also think about or update the following about post-divorce (or before remarriage):
- Income taxes documentation
- Prenuptial agreements
- 401(k) benefits
- Social Security benefits
- Annuities or Life Insurance
- Cost sharing
- POA or Healthcare Proxy
- Will or Trust
A new estate plan, post-divorce, can provide you with the opportunity to personally update your instructions, legacy letter, beneficiaries, guardians of children, and trustees of any minors’ trusts. If you are single, with no plans to remarry, you should also think about choosing a Power of Attorney and have an Advanced Medical Directives set up, should you become incapacitated. Having a new POA and health care proxy in place will make it clear who has the authority to act on your behalf should you require assistance. It will also reduce the chance that there will be a court ordered guardianship. A new estate plan will also allow you to address any changing children’s needs, change of heirs and your own personal needs. It will give you the blank canvas to start over and draw out what your new legacy will be. 2021 is a great time for you to take an inventory of your family’s circumstances and begin to build an estate plan that will bring relief and resolutions. Let’s build a new plan for you this year, where you and your family are the priority.
Don’t forget, estate planning should always feel like a customized solution to all of the intricacies of your life and wishes for the future. Steer away from cost saving gimmicks of DIY estate planning, as they may cost you more in the long run. DIY estate planning can be one-size fits all, software based, and may not consider special circumstances or nuances of South Carolina law. Last year has taught us that nothing is promised and to expect the unexpected in life. Don’t chance your estate plan to a DIY pitfall. We can help you create a plan that works for your budget in 2021. Contact one of experts today to help you navigate this next step in life. We’ll visit all important documents and create a new plan for all potential situations. Our goal is to help you protect more than what you thought was possible. Call us today for a free consultation!