The New Challenges of Estate Planning
The challenges of estate planning are being exacerbated by the growing phenomena of ‘gray divorce,’ or the breakup of marriages among couples who are over 50 years of age.
Conflict among family members and other heirs already is the biggest stumbling block to successful estate planning and divorce among older couples is not helping the situation.
The problem with estate planning for those divorcing later in life also strongly impacts retirement planning and funding for retirement. Gray divorce is also having an effect on determining who will be responsible for enacting power of attorney, determining appropriate social security benefits and drafting a will.
According to the National Center for Health Statistics, between 1963 and 2017, the divorce rate for those 55-years old to 64-year-olds climbed from 5 divorces per 1,000 marriages to 15 divorces per 1,000 marriages, and for those 65 and older, it rose from 1.8 divorces per 1,000 marriages to 5.
Not communicating the estate plan with family members is the most common cause of conflict, and the higher rate of blended families contributes to the issue making it a top problem.
In addition to prolonged life expectancy and rising healthcare costs, this upward trend around couples divorcing over the age of 50 has created a growing conversation among us estate planners. Gray divorce is adding another layer of complexity to the estate planning process that already arises with blended families, designation of heirs and other ever-changing domestic structures. As a result, it’s more important than ever to proactively review and discuss the estate plans with our clients and their families on an ongoing basis.
There are a number of external influences that we must keep in mind to ensure effective estate plans. While the higher purpose of estate planning is easy to understand, the factors and threats involved are not. The goal for any estate plan should be to effectively cut through the noise and distractions to build stable plans for parents and their loved ones.
Other concerns about estate planning have arisen in recent years, including the Tax Cuts and Jobs Act. For instance, giving gifts to your family now while the tax advantages are in effect, and setting up trusts to protect assets from future claims, and implement plans now to minimize future capital gains tax consequences.
With changes among family structure and tax policies, paired with the fact that we are living longer with rising healthcare costs, your estate planning should reflect these factors in your approach. The 360° Family Office has a variety of estate planning resources available, including a communication process we customize for each unique family dynamic.
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