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Gray Divorces Changing the Future for Many Senior Americans

Add “gray divorce” to the factors leading to strife in estate planning. Minimizing discord among beneficiaries is one of the top three reasons people decide to have estate plans created, but with more gray divorces, things become complicated.

A survey at the 54^th Annual Heckerling Institute on Estate Planning conducted by TD Bank asked elder law attorneys, insurance advisors, wealth managers and other professionals on the biggest challenge to estate planning. An article in the Clare County Review titled “Rising Gray Divorce Rates Are Making Estate Planning Problems More Complicated” explains the problem, and presents some solutions.

Gray divorce, blended families, naming heirs and changing family structures are making it more complicated—and more necessary—to create an estate plan and review it with an estate planning attorney on a regular basis.

More than a third of the 112 professionals participating in the survey said that gray divorce has the biggest impact on retirement planning and funding. It also impacts naming who becomes a person’s power of attorney and how Social Security benefits are determined.

The biggest way to help avoid family conflict in a gray divorce is the same as in any other divorce: regular communication. The family members need to know what is being planned, including who will be the designated beneficiaries and who will be named as executor.

The divorce process is complicated at any age, but after 50, there are usually more assets involved. The spouse is usually listed as the beneficiary on most, if not all, assets. Each asset document must be changed to reflect the new beneficiaries. Dividing pension plans, IRAs, and other retirement funds entails more work than simply changing names on bank accounts (although that also has to happen).

Wills, trusts, life insurance, and titles on real estate must also be changed. Institutions and companies that have accounts must be contacted, with information updated and verified.

Trusts are growing in popularity as a means of leaving assets to heirs, since they can minimize costs and delays when property is transferred. Trusts make it easier to pass assets, if family conflict is expected.

Even when beneficiaries aren’t expecting any cash assets to be left to them, controversies can still erupt over other assets. Adult children may not care about IRAs or trusts, but often the family home has great sentimental value. Deciding what to do with it can lead to fighting among siblings.

For those considering a gray divorce, talking with an estate planning attorney, in addition to a matrimonial attorney, could make this large life change less stressful. The estate planning attorney will be able to work with the matrimonial attorney, to ensure that estate issues are handled properly.

Reference: Clare County Review (February 10, 2020) “Rising Gray Divorce Rates Are Making Estate Planning Problems More Complicated”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Gray Divorces Changing the Future for Many Senior Americans

Add “gray divorce” to the factors leading to strife in estate planning. Minimizing discord among beneficiaries is one of the top three reasons people decide to have estate plans created, but with more gray divorces, things become complicated.

A survey at the 54^th Annual Heckerling Institute on Estate Planning conducted by TD Bank asked elder law attorneys, insurance advisors, wealth managers and other professionals on the biggest challenge to estate planning. An article in the Clare County Review titled “Rising Gray Divorce Rates Are Making Estate Planning Problems More Complicated” explains the problem, and presents some solutions.

Gray divorce, blended families, naming heirs and changing family structures are making it more complicated—and more necessary—to create an estate plan and review it with an estate planning attorney on a regular basis.

More than a third of the 112 professionals participating in the survey said that gray divorce has the biggest impact on retirement planning and funding. It also impacts naming who becomes a person’s power of attorney and how Social Security benefits are determined.

The biggest way to help avoid family conflict in a gray divorce is the same as in any other divorce: regular communication. The family members need to know what is being planned, including who will be the designated beneficiaries and who will be named as executor.

The divorce process is complicated at any age, but after 50, there are usually more assets involved. The spouse is usually listed as the beneficiary on most, if not all, assets. Each asset document must be changed to reflect the new beneficiaries. Dividing pension plans, IRAs, and other retirement funds entails more work than simply changing names on bank accounts (although that also has to happen).

Wills, trusts, life insurance, and titles on real estate must also be changed. Institutions and companies that have accounts must be contacted, with information updated and verified.

Trusts are growing in popularity as a means of leaving assets to heirs, since they can minimize costs and delays when property is transferred. Trusts make it easier to pass assets, if family conflict is expected.

Even when beneficiaries aren’t expecting any cash assets to be left to them, controversies can still erupt over other assets. Adult children may not care about IRAs or trusts, but often the family home has great sentimental value. Deciding what to do with it can lead to fighting among siblings.

For those considering a gray divorce, talking with an estate planning attorney, in addition to a matrimonial attorney, could make this large life change less stressful. The estate planning attorney will be able to work with the matrimonial attorney, to ensure that estate issues are handled properly.

Reference: Clare County Review (February 10, 2020) “Rising Gray Divorce Rates Are Making Estate Planning Problems More Complicated”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Financial Infidelity that Appears after One Spouse Dies

When one member of a couple handles all the finances and dies, the surviving spouse is often left with a serious problem. Locating investment accounts, passwords to online accounts and other important information becomes an overwhelming problem, according to the article “Why smart people don’t recognize financial infidelity” from The Mercury. It’s a relatively new term, but not a new problem.

Take the case of a recently widowed or divorced person who has met a new person who appears to be the new love of their lives. The person is kind to them, supportive, and well, perfect. It’s hard to believe that such a seemingly wonderful person could have a dark side. However, whenever a new friend, hobby, or investment idea starts having a major impact on the person’s financial life, or if they have simply been careless with their financial affairs, the impact can become catastrophic.

People who are not confident in their ability to manage money or investments often hand off that responsibility willingly to their partner. If in a prior life, your spouse managed all of the household money and you did not learn how to handle the tasks that are required to run a home or manage an investment portfolio (or work with advisors), you might be a little too willing to pass that job on to a new partner.

You may fall into the traditional role of one person being responsible for the outside bills and investments and the other handling all of the household tasks.

Financial infidelity also includes things like having accounts that are not known to the other spouse or taking out credit cards without the other person’s knowledge. The same goes for one spouse suddenly putting a lifetime of savings into a single investment, or someone who knows little about markets spending a great deal of time day trading with the family’s savings. Gambling or excessive spending can also be financial infidelity.

What can you do? Here are a few tips.

Don’t give up control of finances. It’s not uncommon for people to combine finances when they are first married. However, if you are heading into a second marriage, you may want to keep your money separate at first. Not paying attention to what’s going on with your money at any stage of life, can lead to problems.

Educate yourself about money. If one of you is better at money management, that’s fine—but the one who is not needs to get up to speed. There are classes in personal finance at the local high school or college, so cost should not be an issue.

Speak up. If one person is made to feel like they can’t talk with their partner about money, there’s a problem. There may be accusations of trust—but trust is not granted automatically. Trust is built between a couple through experience. Financial transparency between partners is a sign of respect.

Read and understand documents before you sign anything. If you have questions, don’t sign anything until you have a full understanding. You should not be pressured into making decisions or commitments until you are completely comfortable with all of the information. If you don’t get a satisfactory answer, don’t sign.

Part of your protection from financial infidelity is an estate plan. Speak with an estate planning attorney about creating a plan to protect your assets after you pass and while you are living. An estate plan needs to include a will, powers of attorney, power of attorney for healthcare and may include trusts, living wills, and other documents, depending upon your situation.

Reference: The Mercury (Jan. 29, 2020) “Why smart people don’t recognize financial infidelity”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

She Won’t Do That Again: Wendy Williams Didn’t Have a Prenup

The Wendy Williams Show host filed for divorce from her estranged husband Kevin Hunter after more than 21 years of marriage, according to In Touch’s recent article, “Wendy Williams Tells Andy Cohen She Will Get a Prenup If She Ever Remarries on ‘WWHL.’” This time around, there was no prenup and it may cost her a hefty sum.

A prenuptial agreement (also called a "prenup" for short) is a written agreement created by two people before they get married. A prenup usually makes a list of all the property each person owns, along with any debts. A prenup states what each person's property rights will be, if the marriage ends in divorce.

“I didn’t think it would end, first of all, and second of all, that is not sexy to introduce paperwork when you are in love with somebody,” Wendy said during an appearance on SiriusXM’s “Sway in the Morning” at the time. “But as a grown person, I’d get with another grown person and that grown person would have a thriving career. I would choose differently this time.”

Wendy told Andy Cohen that she was back on the market, and that she’s been seeing other people, including a doctor in his 50s. The Bravo personality, Cohen, asked the DWTS alum if she was still seeing a mystery man.

“I see many men,” she said.

Andy continued to ask the New Jersey native more questions about her dating life, in which Wendy told him that her ideal guy would be between the ages of 48 and 65 and must be at least 5-foot-8. She also admitted that she still speaks with Kevin, because they share 19-year-old son, Kevin Jr. This is despite the fact that he cheated on her with his mistress Sharina Hudson and got her pregnant.

“I mean, he messed up,” she said. “But, you know, hey, life moves on.”

However, it seems like Wendy is doing just fine now. She told the audience that she likes the new Wendy, who makes good choices and is smart and strong.

Reference: In Touch (September 9, 2019) “Wendy Williams Tells Andy Cohen She Will Get a Prenup If She Ever Remarries on ‘WWHL’”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Robert De Niro Prenup May Send Shock Waves Through New York

According to a recent article in Wealth Advisor, “Robert De Niro Prenup Breakdown Can Rock NYC Real Estate (And $500M Dynasty),” Grace Hightower is claiming that the revised pre-nup makes her a 50-50 partner in all of his post-marital success. De Niro’s wealth is estimated to be around $300 million. He’s also working on a $400 million real estate development partnership with his broker son Raphael.

Grace has been with De Niro one way or another since 1987. They were married 10 years later and almost split in 1999, only to reconcile five years later.

A big issue in the divorce, is the lack of a firm prenuptial contract protecting DeNiro’s fortune.

When the couple got back together, the terms were that she would get $500,000 in cash, along with what it would take to buy her out of the marital home. She’d also get an apartment, then valued at $6 million, as well as $1 million a year in upkeep. However, unfortunately for De Niro, the contact also apparently confirmed in writing that everything he made beyond that was a partnership, 50-50.

A good prenuptial contract should be reviewed, just like an estate plan. If it’s out of date, it should be modified to something more current and defensible. The actor may have only been worth $100 million then. Now that he’s at easily triple that net worth, the numbers no longer add up the same way.

Meanwhile, he’s in deep trying to renovate an entire neighborhood of Astoria into a Hollywood-style film production hub. Purchasing the land is costing close to $75 million.

It’s not all his money. His son Raphael (from a previous marriage) is a high-powered real estate broker lining up venture investors and adding his own funds to the project.

If Grace wants $50 million or even $10 million now, DeNiro and his son could have a problem. He may have to allow Grace to participate in the new project, instead of cash.

If not, he’ll have to borrow or liquidate properties to come up with cash.

We don’t know anything about how his real estate deals are structured, but it might be worthwhile just to hand Grace participation in the new project instead of cash. After all, 50-50 partners don’t bail when there’s millions—or billions—at risk.

Reference: Wealth Advisor (June 24, 2019) “Robert De Niro Prenup Breakdown Can Rock NYC Real Estate (And $500M Dynasty)”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Before Saying “I Do” The Second Time Around, Make a Plan

Given these numbers, invest some time and serious thought to the business aspects of marriage, says Forbes in the article, “6 Second Marriage Planning Tips For You And Your Significant Other Before Walking Down The Aisle.” Start with practicing good communication, a trait that is needed to help any marriage succeed. Have a series of conversations well before setting a date to say, “I do.”

Let’s look at some tips for making sure your next marriage gets off on the right financial foot:

Be open. This means frank talk about your plans and obligations to any children and former spouses. Talk about your credit history, assets, debts and any financial support you must provide.

Look at your property. Review the assets that each of you will bring into the marriage and how they ultimately will be used or bequeathed.

Update your accounts. Be sure that all your records are up to date when you remarry.

Sign a prenup. This isn’t just to protect the assets of the wealthier spouse. It can be important if you both already have established careers, children or significant assets. A prenup lets you decide together and in advance, which assets you’ll share and those to keep separate, in case you divorce.

Work with an experienced estate planning attorney. He or she will help you retitle your investments, update your accounts and modify any beneficiaries on retirement, life insurance and annuity accounts. Since the probate laws aren’t typically designed for blended families, also be sure you create an estate plan, especially if you or your new spouse have children and grandchildren from previous marriages.

Without an estate plan, most probate laws stipulate that your assets will pass to your current spouse and then to his or her children, if you die first.

There are numerous ways that your estate planning attorney can ensure that your new spouse will be taken care of and that your assets will be passed onto your biological children, when the second spouse dies. You may both need a trust, or a marital trust to hold the assets to ensure they go to your children.

Chances are you and your intended will spend a lot of time and energy blending your families. Don’t put it at risk by failing to put a good estate plan in place.

Reference: Forbes (June 20, 2019) “6 Second Marriage Planning Tips For You And Your Significant Other Before Walking Down The Aisle”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Is a Prenup Still a Sticking Point for Kylie Jenner and Travis Scott?

Even the most glamourous people run into a few bumps on their way to the alter, and Kylie and Travis seem to have their share. She’s ready to marry, even open to eloping, say sources, but that prenup is the big unknown.

Radar reports, in the story “I Do! Kylie Jenner & Travis Scott To Wed In Low-Key Summer Wedding,” that those who follow the young couple also know that 21-year-old Kylie and Travis’ relationship has had some rocky days, after his alleged cheating scandal.

“It burns away at Kylie that they had [their daughter] Stormi out of wedlock. However, at the time their relationship was shaky and then things got pushed onto the back burner because they couldn’t figure out a prenup agreement that suits them both,” a source told Radar.

“Kylie got anonymous messages from a woman claiming to be Travis’ side piece,” a source told Radar. “The woman had no proof, but Kylie flipped out.”

Scott denied the affair and professed his love for Kylie during a show at Madison Square Garden in New York a few days later. Kylie reportedly placed some strict rules in their relationship, and they’ve patched things up.

With everything, Kylie is hoping she and her fiancé can exchange vows by summer. In fact, she’s even gotten some inspiration from one of the Jonas brothers.

“She loves what Sophie Turner and Joe Jonas just did and is brainstorming something similar,” the source said about Kylie’s wedding plans. “This won’t be a family-planned event though, as Kylie sees herself above the whole KUWTK [Keeping Up with the Kardashians] circus these days.”

Kylie wants to leave the family-based reality show.

“Kylie thinks KUWTK has run its course,” an informant shared. “She is just so busy with Kylie Cosmetics that she doesn’t have time to deal with the long hours it takes to film.”

One would think that with her estimated $900 million fortune, she’ll ask Scott to sign a prenup. A prenuptial agreement (or “prenup”) is a written contract drafted for a couple before they get married. The agreement will usually detail the property each person owns (and any debts). It also stipulates what each person's property rights will be after the marriage.

Even those without multi-million estates need to give serious consideration to a prenup, especially if one partner has significantly more assets than the other, or is expecting an inheritance. Speak with an attorney to prepare a prenup that honors both people’s wishes and also discuss an estate plan.

Reference: Radar (May 28, 2019) “I Do! Kylie Jenner & Travis Scott To Wed In Low-Key Summer Wedding”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Does Marriage Later in Life Mean Smaller Retirement Savings?

Interesting research from the well-regarded Boston College’s Center for Retirement Research has taken a long-term and in-depth look at what happens to American’s contributions to their 401(k) plan, before and after marriage. It offers an interesting look at two generations who are usually considered vastly different.

“Millennials marry later than previous generations. Since marriage is a major life milestone that often marks a line between youth and adulthood, a logical question is how this delay affects retirement saving,” the report states.

Think Advisor says in its April article, “Do People Save More in Their 401(k)s After They Marry?” that at age 30, only 41% of millennials were married, compared with 59% for the late baby boomers.

The report looked at data from the Survey of Income and Program Participation linked to W-2 records on defined contribution plan deferrals, to determine the extent to which marriage affects retirement savings.

The results of the analysis show that people increase both their participation in and their contributions to 401(k) plans after marriage.

In terms of participation, men respond a bit more after marriage than women. The research shows that men have lower participation rates than women before marriage, but they wind up at the same level once married.

After marriage, women increase their contribution rate by an average of 0.8%, compared to only 0.3% for men, according to the research.

Following these results, the research then looks at what this means, if the trend toward later marriage continues. To do this, the research looks at how much retirement wealth accrued in 401(k) plans by age 65 would have been impacted, if men and women married later than they do now.

The analysis assumes a five-year delay in marriage, which is based on the approximate increase that occurred between baby boomers and millennials.

The analysis finds that the effect of delay, while statistically significant in the regression, is small—a 3.1% decline in accumulated assets for men and a 3.4% decline for women.

Therefore, for all the differences between millennials and boomers, it would appear that both groups share an understanding of the importance of saving for retirement.

Reference: Think Advisor (April 23, 2019) “Do People Save More in Their 401(k)s After They Marry?”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Should You Add a “Baby-Nup” to Your Estate Planning Documents?

Social changes always spark debate, and changes in parenting are no exception. The discussion of whether soon-to-be parents need to map out their parenting journey with a baby-nup has many on both sides of the argument all fired up.

MSN’s article, “Would you sign a 'baby-nup'? New trend sees expectant parents drawing up contracts to agree how they'll divide childcare and chores,” explains that the concept involves signing an agreement to split up chores fairly between the two parents before the child is born and agree on custody arrangements, if the couple winds up divorcing.

Parade magazine interviewed a couple, Julie Hochheiser Ilkovich and Daniel Ilkovich, who had a series of meetings ahead of their daughter's birth to detail some of the tasks in their future.

They decided “what they wanted to try to keep about their lives (date nights, gym time, etc.) and how they would make it all work, including who would also handle chores, as well as day-to-day things like pediatrician appointments and Amazon orders.” After two years, every morning and every evening is designated to one or the other parent.

Some on social media were quick to say it seemed like a great idea. Another commented “It sounds good in theory. However, many circumstances could change, by the time you have a baby or get divorced.”

Others said that parenting should be done equally without the need for a contract stipulating the conditions. As a result, there doesn’t need to be a document to divide up responsibilities.

Another commented: “Oh for goodness sake!! Babies are really not that difficult, if you're doing it right!”

Other parents were quick to point out that it's difficult to predict the realities of parenthood, until after the child is born. The responsibilities were often unequal at times.

One person said that until you've lived it, it's hard to know who will need extra support and that sometimes one partner will need to carry the other.

Another writer added, “It's called being a parent. Either embrace every good, bad, wonderful and annoying thing that comes with it, or don't have kids.”

If you consider a ‘baby-nup’ in the same conversation as you do a pre-nup, you might want to do so while you are having your estate plan prepared. All new parents should be sure to have an estate plan in place to protect each other and their children. Your last will and testament includes information about who you would want to raise your children, if something should happen to both parents. That is more important than a heated discussion about who has Thursday nights off from parenting. Speak with an estate planning attorney to create a plan for your new family.

Reference: MSN (April 29, 2019) “Would you sign a 'baby-nup'? New trend sees expectant parents drawing up contracts to agree how they'll divide childcare and chores”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899

Amazon’s Billionaire Bezos Divorce: He’s Still Very Rich

When personal wealth is measured in billions, there are no lack of advisors and strategies that can be used to protect income, investments and shares of a business from the IRS or matrimonial attorneys. News about the divorce of Amazon’s Jeff Bezos reports that he’s handing over 25% of his controlling stake in Amazon.

According to this article from WealthAdvisor, “Bezos Besieged: Was $35 Billion Divorce The Most Expensive Wake-Up Call Ever?” Bezos never moved this company stock into a trust. The divorce settlement of 25% of Amazon with his ex-wife MacKenzie is really a bargain, despite the fact that it means whittling at least $35 billion off his net worth.

Bezos still has 59 million shares, a 12% stake in the company, as well as voting rights on all her stock, for as long as she owns it, which still gives him control.

Bezos’ mistress also recently just filed for divorce, so if he wants to protect his remaining $108 billion in Amazon stock and eliminate the risk of marital history repeating, he should make some plans. A prenuptial arrangement is definitely needed for any future marriage. And yet, he won’t be struggling, even if there is a second marriage and it too ends without a prenup.

Bezos could live an extravagant life, running through $1 billion a year and still have plenty of money to live on.

For now, the company continues to depend upon his vision. Amazon began as an out-of-the-box idea. He’s grown the company into a world-changing force, and the Amazon most of us deal with, is just a small part of it. There’s no doubt he’ll continue.

In addition to consideration of wealth protection and prenups, Bezos should start thinking about his legacy and a succession plan. At age 55, he’s far from done being a visionary, but it would be wise for him to make a plan to gradually remove himself from the day-to-day Amazon operations. He’ll want to develop the next generation of visionaries, who can continue his course.

Reference: Wealth Advisor (April 8, 2019) “Bezos Besieged: Was $35 Billion Divorce The Most Expensive Wake-Up Call Ever?”

∗ For more information about this and other similar topics, please visit: www.LambrosLawLLC.com or call us at: (401) 383-9899