Estate planners and attorneys are watching the rise in divorces
after 50 play out in often negative ways, according to TD Wealth.
Divorce among couples 50 and older is
increasing, as are life expectancy and health care costs, and estate planners
and attorneys are watching this trend play out in often negative ways among
their clients, according to TD Wealth.
“Gray divorce is adding another layer of
complexity to the estate planning process that already arises with blended
families, designation of heirs and the ever-changing domestic
structures,” Raymond Radigan,
head of private trust at TD Wealth, said in a statement.
“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.”
TD Wealth surveyed 112 participants in the 54th
Annual Heckerling
Institute on Estate Planning in January. Respondents
included attorneys, trust officers, accountants, charitable giving
professionals, insurance advisors, elder law specialists, wealth management
professionals, educators and nonprofit advisors.
Two in five respondents said gray divorce was
causing a rise in family conflict, already a significant challenge within
estate planning.
In addition, 39% said retirement planning and
funding were highly affected estate planning factors for divorcing couples over
age 50.
Respondents noted that divorce among mature
adults also influences decisions about who will be responsible for enacting
power of attorney, determining appropriate Social Security benefits and
drafting a will.
One wealth advisor recently opined that
divorce at any age does not have to be contentious.
In its survey, TD Wealth looked beyond gray
divorce to more traditional causes of family conflict for those engaged
in estate planning.
Forty-three percent of estate planners and
attorneys said not communicating the estate plan with family members was
the most common cause of conflict, followed by dealing with blended families,
cited by 29%.
Only 13% of respondents reported that
designation of beneficiaries was a cause for conflict in 2020, well down from
30% who said this in the 2019 survey.
“While the purpose of estate planning is
concrete, the factors and threats involved are far from it,” Radigan said. “The
goal for any estate planner should be to effectively cut through the noise and
distractions to build stable plans with our clients and their loved ones.”
Other Threats to Estate Planning
In TD Wealth’s 2018 and 2019 surveys,
participants identified family conflict as the leading threat to estate
planning. In the 2020 survey, however, estate planners were split about the
source of threats:
·
Family conflict – 25%
·
Tax reform – 25%
·
Prolonged life
expectancy and increased health care costs – 25%
The survey results showed that tax reform
continues to have a big effect on estates and trusts. In response, estate
planners are reconsidering the implementation of traditional strategies to work
with the exemption, rather than treat it as an obstacle.
Thirty-nine percent of respondents said they
suggested to clients to gift now when exemption is high.
At the same time, 23% of respondents suggested
advising clients to consider trusts to protect assets from future claims, and
20% suggested planning to minimize future capital gains tax consequences.
“With changes among family structure and tax
policies, paired with the fact that people are living longer with rising healthcare
costs, the estate planning industry has to reflect these factors in their
approach,” Radigan said.
TD Wealth, he said, is advising some its
clients to consider retaining more now — even though the exemption is higher on
gifting now — because people are living longer and costs attendant on greater
longevity are affecting their estate plans.
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