As I enter the “senior years” of life – at least that’s what I’m told – it’s great to have a partner for the last 40-some years to share the ride. It’s gotten so bad we finish each other’s sentences. It thrilled me to see a 2015 Pew study reporting that divorce rates for younger people are going down.
Unfortunately, the divorce rate for the age 50-and-older crowd is going up. In fact, the same Pew study claims the “gray” divorce rate has nearly doubled in the past 25 years.
I remember some examples of this from my college days. On two separate occasions, only a few months after being dropped off for college our Freshman year, my classmates were hit with the news that their parents were divorcing. In both cases these were the youngest children, and mom and dad were waiting for them to go off to college before separating. I was naive and didn’t understand the broad reach of its impact at the time.
I was recently talking to my friend Shawn Britt, Director of Long Term Care Initiatives for Nationwide Financial. She is involved in many levels of long-term-care planning. With senior divorce rates on the rise, long-term-care needs to be more thoughtful than ever.
Shawn shared some case studies that are real eye openers.
1. A widowed mother of a teenage daughter remarried – this second marriage lasted 20 years. During that time, her new husband purchased life insurance policies with long-term-care riders. Because he was paying with money he brought into the marriage, he wanted to keep ownership of both policies. Years after the divorce, when mom needed care she talked to her ex-husband about the policy and a claim was filed. To the mom and daughter’s surprise, the ex-husband received the indemnity benefit — and kept it. Turns out there was nothing they could do about it.
So, what was the planning issue here? The mother’s divorce attorney didn’t address the issue of the long-term-care policies when discussing the divorce settlement and the mother likely didn’t know her ex-husband owned and benefited from the policy.
2. A husband and wife, each on their second marriage with grown children from previous marriages, had a linked benefit for long-term-care - each owning their respective policies even though the wife provided all the capital. When the husband needed care, his wife could not file the claim because he had given Power of Attorney to his children. The children refused to file a claim thinking, as long as a wealthy spouse was alive, they should save the benefit to protect their own inheritance.
So, what was the planning issue here? Make sure intent is established at issue. Don’t just assume the rules are the same for everyone. This is why all plans should be personalized.
3. A “hippie era” couple who lived together happily for 40 years never officially married and never had children. They saw the importance for long-term-care so they purchased a linked benefit plan for each of them. When cognitive impairment struck one spouse, the absence of a legally binding marriage and Power of Attorney made it impossible to gain information and file a claim. Court appointed guardianship was eventually granted but it was a long, expensive process that could have been avoided.
What was the planning issue this time? No Power of Attorney. Without marriage, certain rights awarded to married couples aren’t available without a Power of Attorney. HIPAA release forms and living wills should have also been in place, especially with the knowledge that this couple wasn’t legally married.
With the number of gray divorces on the rise, financial planning is becoming increasingly complex for couples.
Shawn says when seniors remarry, their adult children might be skeptical of their new step-parent. Some concerns are:
1. Did she marry dad for financial support?
2. Are her kids after dad’s money too?
3. Is he expecting mom to be a “nurse and a purse?”
Like the three case studies we looked at, the key point is to be preemptive in your planning. Shawn says other financial planning points to discuss when marrying later in life are:
1. The financial contributions from each spouse - If they’ve been married before, chances are they each have their own preferred method of managing money. It might take some time to readjust to a new system, but that doesn’t mean they should forgo planning.
2. Which legal documents should be in place - This is especially important if children who are expecting an inheritance are involved. Sometimes this is the very reason adult children are wary of their parents re-marrying. Talk to an attorney to make sure all the necessary legal documents are in place.
Have an open conversation about the intention of any long-term-care plans. The most important thing to remember? Don’t procrastinate. Take care of these things before it’s too late.
Keep your eyes wide open, my friend.
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