Did you know that gray divorce rates have doubled since the 1990s? A gray divorce is a term used to describe the ending of a long-term marriage. Unlike going through a divorce in your 30s, a gray divorce leaves you with less time to recover and higher stakes in several areas of your life. Upon divorce, there may be a million things going through your mind — how this change will affect your family, where you may live, how you’ll adapt to this new stage — but updating your estate plan may not be one of them. A divorce doesn’t just end a marriage — it can unravel years of planning if you don’t act fast.
Why Gray Divorce Is an Estate Planning Emergency
When you got married, you probably named your spouse on most of your legal documents, such as your will, power of attorney, and healthcare directive. Upon divorce, your spouse will still have legal authority from being named in these documents. It is worth noting that in Alabama, a divorce does affect certain provisions in your will that involve your spouse. However, it is best to be proactive and make necessary changes to your beneficiary designations listed on important papers. If something were to happen to you, who would you want to have legal authority over your financial and medical decisions?
The Four Documents You Must Update Immediately
The following documents make up the core of your estate plan, making them essential to revise in your situation:
- Will – Remove your spouse as beneficiary and executor, and replace with the name of someone you trust. This could prevent unwanted inheritances or authority over your property.
- Financial & Healthcare POA – Designate a new agent as soon as possible, ideally before the divorce is finalized. Choose someone with your best interest at heart.
- Healthcare Directive / Living Will – Consider who you want to be your voice if you’re unable to speak for yourself.
- Beneficiary Designations – Check your accounts, including life insurance, IRAs, 401(k)s, annuities, bank accounts, and make sure everything reflects your current wishes.
Dividing Retirement Assets and What Comes Next
You’ve built a life with your spouse. You probably have several shared assets that need to be divided, including but not limited to your home and retirement savings. Alabama is an equitable distribution state, meaning that assets are split fairly but not always equally. Prepare for asset distribution by considering the following:
- Create a list of your joint assets acquired during the marriage
- Make note of assets you individually own
- Determine the value of your joint assets and how you wish to divide what you own
One important benefit that often gets overlooked in a gray divorce is Social Security. If you were married for at least 10 years, you may be eligible to claim Social Security benefits based on your ex-spouse’s work record — even after the divorce.
This can be especially valuable if your own Social Security benefit is lower than half of your ex-spouse’s. You can claim this benefit without affecting what your ex-spouse receives, and it doesn’t require their cooperation or even their knowledge.
Understanding your Social Security options is a critical part of your post-divorce financial picture. An attorney or financial advisor can help you evaluate what makes the most sense for your situation.
Long-Term Care Planning Just Got More Complicated
At this stage in your life, you may have considered the need for long-term care. You may have wondered what would happen if you needed additional care, and how you would pay for this hefty cost. During your marriage, you had a built-in support person, someone to help carry the financial weight of long-term care needs. As a single person, you no longer have a shared income or Medicaid spousal protections. You are solely responsible for your own care. Working with an estate planning attorney can ensure that you’re protected in all stages of life. If you’re unsure how you would manage the need for long-term care on your own, it’s time to start the conversation.
If Remarriage Is on the Horizon
Found love again? Are you considering remarriage? Then you may want to consider a prenuptial agreement. This essential tool isn’t just for the wealthy, a prenuptial agreement can save your legacy, safeguard your assets, and protect your children. You can provide the roadmap for how to navigate the road ahead by making your intentions clear. Start this new chapter with peace of mind.
Contact Miller Estate and Elder Law
As you enter this new phase of life, make sure that your estate plan reflects your current circumstances. Does your plan make sense for the life you’re living now, or does it work for the one you had before? This transition can be challenging, and it’s easy to leave your future unprotected. At Miller Estate and Elder Law, we can help you rebuild your plan from the ground up.