Americans Sure Do Like to Get Married… and Remarried!

Surprising Ways Marriage and Divorce Affect Retirement Planning

 

All You Need Is Love! (?)

Older folks (70+) are probably married (54.2%).

Most (68%) are first-timers, but one-third are giving it another go![i]

“Gray” divorce, fueled by social acceptance and higher expectations, is on the rise.  Over the last 30 years, the divorce rate among couples 65+ jumped from 5% all the way up to 15%![ii]

Once Bitten, Twice Shy? Nope… 50% of divorcees remarry.[iii]

Hope Springs Eternal, But Retirement Planning Is NOT Forever…

Marriage and divorce have profound and shocking consequences for retirement and estate planning.

We know! By the time your divorce is final, you will never want to look at a legal document or lawyer ever again. Tough! Marriages and marital plans fail for reasons that are unique to each couple and for reasons that stretch back to the beginning of time. And now you are just sick of it, you want to forget, you wish to forget, you’re waiting to forget. BIG MISTAKE!

Divorce puts your estate and retirement plans in the blender and hits FRAPPE!

Existing documents (if you have any) must be revised to reflect your new realities. What do you want now? How can you maximize your security when your change in marital status is finalized?

Everybody just wants to move on quickly. So quickly, in fact, that your ex- remains your primary beneficiary on everything from your life insurance to your checking account to your will and trust. What were you thinking?

So many people make these foolish and destructive mistakes, that the Michigan Legislature has kindly stepped in to save us from ourselves. Automatically!

Michigan’s Revocation on Divorce Statute, MCL 700.2807, automatically cancels gifts or appointments of property to your ex-spouse and nasty in-laws. Any authority you may have given to control or manage assets in a will or trust, from before the divorce, is kaput! The Law pretends that your ex-spouse and their relatives died already, before you did. So nothing goes to them, but to your contingent beneficiaries.

Beneficiary Designations: Beneficiary designations for your ex-spouse on life insurance policies and retirement accounts are also cancelled, although there are (of course) exceptions and special rules depending on the specific type of account.

Tenants By The Entirety: There’s a special form of real estate ownership that only married couples can use. Divorce generally chops the real estate into tenancy in common, so that each one’s share will pass according to their will or trust, and not to the ex-spouse.

What About Long-term Care?

Married couples are specially favored when it comes to qualifying for long-term care benefits. Even if the couple has not done any planning at all, our David Carrier Team can save almost all the assets and spare the spouse from 24/7/365 care responsibilities.

But that was then, this is now. As a single person, the set-asides and techniques are different and LIMITED.

Single folks must actively plan for themselves. There are effective techniques and legal strategies that we have used to save millions of dollars for thousands of single folks. But you must act in advance to avoid losing almost everything.

What Do I Do Next?

Update (Or, let’s face it, create for the first time) your retirement and estate planning documents:

• New Will: Get rid of all prior editions. Designate new beneficiaries, personal representatives, conservators, and guardians for your minor children.
• Restate and Fully Amend Trusts: Don’t amend, restate. Funding your trusts all over again will be a pain, but not nearly as painful as fighting your ex-spouse over control and ownership of the trust property.
• Beneficiary Designations: Change beneficiary designations on annuities, bank accounts, life insurance policies, retirement accounts, and other financial assets to reflect your new restated trusts.
• Powers of Attorney: Those old financial and healthcare powers of attorney are outdated by now anyway. Shred ‘em! Name your new agents and patient advocates from trusted friends and family without divided loyalties. Written revocations are best, with notice to your ex- to eliminate any previous powers.

• Advance Directive: Reflect on your current wishes regarding health care and end of life care.
• Consult with your David Carrier Team to ensure your revised retirement and estate plan is comprehensive and legally effective.

Going To the Chapel and We’re Gonna Get Married…

Your David Carrier Law Team continues to study the impact of marriages and divorces on retirement and estate planning and how to best face the stresses of change.

Couple’s Considerations: Adapting Estate Plans to Ring in a New Marriage

With every wedding bell that chimes, couples vow to share every aspect of their lives in holy matrimony. This can be a home, children, hardships, or the one that is easily overlooked, an estate.

After getting married, all couples should renew their estate plan to reflect their new livelihoods. These updates can include changes to wills, trusts, and beneficiaries. Assets become shared, and adapting your estate plan to include your spouse can ensure that your assets remain in their care.

There are certain tasks to complete when adapting an estate plan after a marriage:

• Updating your will or trust to list your spouse as your beneficiary
• Listing your spouse as an authorized representative for directives
• Specifying the assets to be transferred to your spouse

Estate planning after marriage can address dilemmas that can induce legal conflict without clear direction. For instance, a parent with an existing child who enters a new marriage must decide whether their child or spouse will receive their assets to avoid disputes.

Prenuptial Agreements: When It’s the Right Answer

No one expects divorce from the time of marriage which is why it is often more difficult to handle estate plans in this case. Those who wish to plan for the unfortunate unexpected should strongly consider a prenuptial agreement, also called a marital agreement or prenup.

A prenuptial agreement expresses your mutual decisions regarding the consequences of death or divorce to beneficiaries and assets. It is not uncommon for successful marriages to consider prenups despite how happy the couple is in their relationship. Having a safety net removes the stress of any doubts and dissolves any potential complications that often come with divorce.

Conclusion

Both happily married couples and hopeful divorced persons must update their retirement and estate plans to accommodate changes in their marital status. Adapting estate plans in response to these lifetime events can remove complications before they happen and give estate holders the true peace of mind that comes from assured, well-founded security.

David Carrier Law is available to assist you with creating or updating your estate plan as your team of trusted estate planning lawyers near you.

[i] 2022 American Community Survey

[ii] National Center for Family and Marriage Research

[iii] Pew Research Center