Wednesday, April 24, 2019
The past 25 years has seen a dramatic rise in the amount of divorces for those over the age of 50 and even 65. For the 50 and up group, divorce doubled; 65 and up saw the divorce rate triple. Many of them remarry, and this can cause dire consequences for their adult children.
When it comes to a second or third marriage, family dynamics may be split along bloodlines. When one spouse dies before the other, the entire estate may transfer to the other spouse, leaving the children of the first spouse out of luck because their step-parent may not be obligated to leave them anything.
Here are some steps that can protected an heirs inheritance when there is a gray divorce and subsequent marriage.
- Negotiate a prenuptial agreements with the new spouse. This may take some sensitivity, but it will protected all members of the blended family.
- Prior to the gray divorce, establish a life insurance policy with the children as beneficiaries and for it to be held in trust by a third party.
- Sign a post-nuptial agreement if a prenup was not performed so that both parties' estate plans provide for either's spouse as well as their own children.
- Purchase long-term care insurance so that the inevitable costs of aging do not deplete either spouse's estate.
- Gifts during a spouse's lifetime or a fully discretionary trust that permits distributions to be sprinkled among a child and grandchildren would keep the assets out of the reach of creditors, including a divorced spouse of a child..
- An estate plan that includes a marital trust that provides for the subsequent spouse during their life, and then at their death, distributes the assets to the children, step-children, and grandchildren in accordance with the terms of the trust.
See Nancy S. Hearne, The Rise of Gray Divorce and Disinheritance, Saul.com, April 2019.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.