Tips for valuing assets if you are over 50 and divorcing

Couples over the age of 50 are the fastest growing segment of the population to divorce – which can be disastrous financially if mistakes are made in dividing assets.  Here are some things to watch out for:

Understand the true value of retirement funds.  For many boomers, their retirement accounts can be their most significant asset.  The value of those accounts is not the balance, since withdrawals are taxed – experts say the true value is about 65 percent of the balance.  If one spouse takes the house and the other takes the retirement accounts, what looks equal on paper could turn out to be horribly lopsided a few years down the road.

Don’t overvalue alimony.  Alimony is often used to compensate for discrepancies in a couple’s income, but relying on monthly alimony payments gets much riskier after 50 since the chance of the payer dying is greater.  You may want to consider getting a life insurance policy on your ex as a precaution.

Don’t undervalue Social Security.  If you were married for more than 10 years, the lower income spouse is entitled to half the higher income spouse’s Social Security benefits once she or he turns 62 and is not remarried.  This should be figured into alimony negotiations.

Don’t forget the kids.  Couples who divorce later in life won’t usually have custody battles to deal with, but they may still want to protect assets for their children in case of their remarriage.  You can create a lifetime asset protection trust to protect your assets for your children, and keep them protected in case your children divorce.

If you’d like to learn more about how we can help you with your long-term care and Medicaid planning, please contact us for your initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.

Retitling your assets after a divorce

In Florida, once a married couple divorces, the ex-spouse is no longer entitled to the “surviving spouse’s elective share” of an estate, but property may be left to an ex-spouse in a Last Will and Testament.  The best thing to do if you are separated or divorced is to update your will so there is no issue about where your assets should go.

Some assets like life insurance or retirement accounts may pass outside of an estate through beneficiary designations or as the result of joint ownership rather than through a will. Bank accounts held jointly with an ex-spouse or other property held in joint tenancy with an ex-spouse will pass to the ex-spouse upon death unless the accounts are retitled to change the ownership.

In order to change your beneficiary designation from your former spouse to a child or a third party, you must complete new beneficiary designation forms for each individual fund or insurance provider. You can name specific people or a trust as beneficiary.  Each fund or insurance policy may have different requirements; you may need to provide a copy of your divorce decree to make the necessary changes.

A few other considerations regarding changes to an estate plan following a divorce include:

Don’t wait until the divorce is final. You don’t have to wait until your divorce is final to revise your estate plan. This is especially important if your divorce is likely to take a number of months or years to complete.

Review your executor and/or trustee choice. If you die while your children are still minors, your ex will likely become legal guardian – but this does not necessarily mean they should be your executor or the trustee of your children’s inheritance.

Update your Advance Medical Directive. If you become incapacitated, do you want your ex to be making decisions about your healthcare? If not, you need to update your advance medical directive as well as your living will and any other advance directives that name your ex as a decision maker.

At The Estate, Trust and Elder Law Firm, P.L. we help our Treasure Coast clients develop and implement comprehensive estate planning strategies personally tailored to their unique situation, needs, and goals.   Contact us for your initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.

Getting a divorce? Don’t forget to update your estate plan

Couples fight over finances more than almost any other topic, and when personal finances are ailing, many marriages tend to go the same way.

If you and your spouse are victims of this phenomenon, there are many steps that can be taken to try to gain control of the fire before it gains control over you. Options range from finding professional marital counseling to a visit to your financial planner to help understand your financial options. Even if you overlook the emotional toll (which obviously is no small thing), the cost of saving a marriage is much less than the cost of dissolving it.

However, even the most determined and well-intentioned couples will sometimes end up going their own ways. If that does happen, it is more important than ever to ensure that you and your family (and your business if you have one) are protected.

It is likely that many of your tax-deferred savings accounts (retirement accounts, life insurance policies, etc.) name your ex-spouse as the beneficiary. It is also likely that if you created any estate planning documents pre-divorce, your ex is named as your health care agent, financial agent, executor, etc. If you had an amicable divorce you may still be okay with this, but what happens if your spouse remarries? What if he or she has children with the new spouse?

If you are recently divorced or going through a divorce, you are going to be overwhelmed, emotional and exhausted. The easiest thing in the world would be to put off your financial or estate planning. One word of warning:  Don’t.

Our experienced and trusted estate planning attorneys have been serving Treasure Coast families for decades, and Michael Fowler is one of only four Treasure Coast attorneys who is Board Certified by the Florida Bar in Elder Law.  Contact us for your initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.