Cheryl Chapman Henderson, LLC

Divorce After Age 50 and the Impact on Retirement Plans

“Divorce can be painful emotionally and financially for anyone. But when the split happens later in life, the less time you have to recover from the economic hit. And, far more is at stake.”

There’s an increasing number of older adults who must address this issue. The divorce rate among U.S. adults 50 and older doubled between 1990 and 2010, and about one in four divorces include someone over 50. The data through 2014 found the rates have been about the same in subsequent years.

ABC News’ recent article, “Keeping Some Green in Gray Divorce,” says the reasons for the rise include longer lifespans, more women in the workforce, changing notions about marriage and higher rates of remarriage, which boost your odds of splitting.

Here are some things to consider when divorce suddenly becomes part of your retirement plan. The issues involved in a "gray divorce" are much like those of a divorce at any age, but things like limited working years ahead, complicated assets and adult children may make the process much tougher.

Be sure you have a team of professionals to guide you through the process. This should include an attorney, mediator, financial planner, accountant and a therapist. In a gray divorce, a financial expert is important because you have a lifetime of assets built up. Retirement finances are critical and complex, and you should seek the advice of professionals.

A big issue with an older couple is who gets to keep the family house. You should be receptive to alternatives that will leave you in a better position. Selling a home or choosing other assets in the settlement may give you the income you’ll need in the future. Plus, downsizing can significantly help manage your expenses.

The biggest challenge for individuals going through a gray divorce is making certain that there's enough money to provide a comfortable retirement. Consider and reexamine your options based on the settlement. You might need to delay retirement, return to work, downsize or make other adjustments.

Remember that healthcare can be expensive in retirement. If you’ve been married 10 years or more, you may qualify to receive spousal Social Security benefits.

Make sure you update all the legal agreements and accounts you've set up during the course of your marriage, especially wills, estate plans and beneficiary designations for retirement accounts.

Reference: ABC News (September 7, 2016) “Keeping Some Green in Gray Divorce”

Like Gene Wilder, Many Opt to Keep Alzheimer's Disease a Secret

“Because cognitive impairment is likely for most people as they age, advisers shouldn't wait for signs to start planning.”

Comedic actor Gene Wilder, who died last week at age 83 from complications of Alzheimer's disease, didn’t tell anyone about his illness for at least three years. That's common, reports Investment News in “Hiding Alzheimer's, like Gene Wilder did, is natural, so prepare for it with all clients.”

The star of Willy Wonka and the Chocolate Factory and many other successful comedies is said to have wanted his fans to keep laughing over his life's work instead of being sad about his failing health.

Most Alzheimer's patients will hide their symptoms as long as they can because they'll lose control of their lives if their family or friends are under the impression they can’t take care of things on their own.

The first thing to recognize is that cognitive impairment is a significant risk. Financial advisers and elder law attorneys should take steps to protect these clients' finances from the impact of debilitating conditions like Alzheimer's. This is best accomplished before they notice any changes in the individual’s behavior. With dementia and Alzheimer's so common in the elderly, criminals frequently target older individuals because they can more easily be swayed into releasing money or disclosing personal information.

The first thing elder law attorneys will do is have their clients execute a legal document that lists the family members or friends whom the attorney can contact to discuss private information if he or she believes the client is starting to have cognitive problems. Clients may need some time to consider this difficult issue. However, if they refuse to provide this information, financial planners will often require them to sign a different document that releases the adviser from liability if the client is harmed because of his or her cognitive decline.

Get the complete legal picture from an experienced elder law attorney.

Advisers may also have a checklist to complete each year about their clients to monitor changes and document them over time. When they see “red flags,” like a client with memory loss or difficulty understanding the consequences of decisions, advisers may ask that a trusted contact start attending planning meetings.

Hearing a professional tell you he or she thinks you might have dementia is never welcome news, but this may be the opportunity to get medical assistance and to plan ahead for potential issues in the future.

Reference: Investment News (September 1, 2016) “Hiding Alzheimer's, like Gene Wilder did, is natural, so prepare for it with all clients”

Is Elder Abuse the Next Big Crime Wave?

“Advocates gather to hash out possible solutions.”

About 400 social workers, law enforcers, lawyers, nursing home workers, and others who work with vulnerable adults gathered recently at the University of Minnesota to discuss what some think could be the next big crime wave: elder abuse.

The Minneapolis Star Tribune reported in “Minnesota elder abuse reports increasing” that the conference, hosted by the Minnesota Elder Justice Center, was one of many nationwide marking World Elder Abuse Awareness Day. The recognition began in 2006 and is intended to raise awareness of financial crimes and other abuses targeting older people.

One Anoka County prosecutor commented that more tips are coming from financial institutions and nursing homes. These tips cover a wide variety of concerns, including possible financial exploitation and medication thefts. Elderly victims often are reticent to report the crimes because they’re embarrassed and don't want to be perceived as being vulnerable.

One assistant Hennepin County prosecutor said that crimes against the elderly are "doubling year-over-year." Yet, there are only two attorneys assigned to work full time on crimes against the elderly in this county. The most common crimes involve financial exploitation by family members and abuse by professionals.

An assistant Carver County attorney said his office is preparing for "a tsunami of financial exploitation" crimes that prey on older people. He noted that prosecutions can be avoided in some instances by asking a suspected abuser to a meeting with adult protection maltreatment investigators to discuss the penalties for elder exploitation.

Ashton Applewhite, an author and activist, remarked in her keynote speech, "We aspire to grow old, and yet we dread the prospect. We are all old people in training."

Reference: Minneapolis Star Tribune (June 20, 2016) “Minnesota elder abuse reports increasing”

Author Harper Lee's Estate Plan as Suspenseful as her Classic Novel

"If she had an estate plan, who did she leave it to?"

When Nelle Harper Lee died last week in Alabama, she left the world with two famous books: "To Kill a Mockingbird" and "Go Set a Watchman." Her loved ones will be left with a fortune.

While the value of her estate isn't exactly known, an old lawsuit showed that Lee earned nearly $1.7 million during a six-month period in 2009 — before she announced the release of her second book last year, sales of which were well over $40 million.

The International Business Times says in its recent article, "Did Harper Lee Have a Will? Here's What Could Happen To The 'To Kill A Mockingbird' Author's Money," that Lee never married and had no children. Her parents and siblings died years ago—and those closest to her have been accused of scamming her. So what happens now?

Lee once publicly said she had a will, but only her friends and family know for certain. She most likely didn't die without her affairs in order: her father and sister were both practicing lawyers (and her estate has been involved in several lawsuits). But given her reclusive nature, she may have created a trust rather than a will. Wills become public record when they are submitted to probate court, but trusts are continued by a successor trustee and administered accordingly. Some reports say Lee's lawyer is the trustee to her estate, but she also has a nephew.

If Lee did have a will, it cannot be submitted to probate court until five days after her death, and the statute of limitations expires after five years.

In most instances, when an individual dies, there will be an executor designated in the will who helps move the process along. But at this point, with the author, it's pretty much conjecture and speculation.

One thing is certain, however: The New York Post reported that Lee's estate plan specifically includes a caveat that Hollywood never make another "Mockingbird" motion picture.

Reference: International Business Times (February 19, 2016) "Did Harper Lee Have a Will? Here's What Could Happen To The 'To Kill A Mockingbird' Author's Money"

Don't Forget to Ask Your Doctor about Dementia

"Do you worry that forgetting names, or where you put your keys, might be a sign of impending dementia?"

Researchers who reviewed federal government data on more than 10,000 people found that in 2011, only 1 in 4 adults aged 45 or older talked about memory problems with their doctor during a routine checkup. Furthermore, the chance that a person would admit to a memory problem in a doctor's office visit declined with advancing age. This was reported in a US News & World Report article, "Too Few Older Adults Tell Doctors About Memory Loss: Study," discussing findings published in the journal Preventing Chronic Disease.

Routine checkups can be a missed opportunity for assessing and discussing memory problems for the majority of older adults. Experts say the stigma of memory loss and dementia may keep some from discussing these issues with their doctors.

Many think that as long as we don't mention it, memory loss might just be normal aging. However, talking about memory troubles doesn't necessarily mean you have dementia. It might be another highly treatable condition, like depression. But if it is related to dementia, recognizing it early is crucial.

Patients can meet with family members and an experienced elder law attorney to get advice on making individualized decisions for their care, rather than relying on last-minute decisions.

Memory loss and the possibility of the early onset of dementia is a difficult discussion for both the physician and patient, particularly in light of the long-term implications. However, early diagnosis of dementia is important, as even mild memory loss from early Alzheimer's disease may be improved with medication (although these prescriptions don't stop the disease's progression).

It can be hard for people to assess whether their own subtle memory loss is "normal," but a discussion with their physician in conjunction with specialized testing may result in answers that could lead to treatment and a better overall quality of life.

Reference: US News & World Report (January 28, 2016) "Too Few Older Adults Tell Doctors about Memory Loss: Study"

Setting a Facebook Legacy Contact

Until now, when someone passed away, we offered a basic memorialized account which was viewable, but could not be managed by anyone. By talking to people who have experienced loss, we realized there is more we can do to support those who are grieving and those who want a say in what happens to their account after death.

Facebook recently launched a new feature that could help your loved ones through the grieving process in the event of your death. It's called a "Legacy Contact."

If you are a Facebook user, you may want to go into your account now and designate your Legacy Contact to manage your account when you pass away. Here is how it works when someone passes away:

1. A friend or family members lets Facebook know by submitting a Memorialization Request here: https://www.facebook.com/help/contact/651319028315841
2. Once Facebook memorializes the account, the Legacy Contact can:

• Write a post to display at the top of the memorialized Timeline (for example, to announce a memorial service or share a special message)
• Respond to new friend requests from family members and friends who were not yet connected on Facebook
• Update the profile picture and cover photo

You also may designate whether your Legacy Contact can download an archive of your social posts. Alternatively, you can tell Facebook that you prefer to have your account deleted upon your death.

For specific instructions about how to name a Legacy Contact, visit Facebook's newsroom at: http://newsroom.fb.com/news/2015/02/adding-a-legacy-contact/

Of course, many state legislatures are currently wrestling with how to handle digital accounts after the user passes away.

Consequently, this issue might eventually be taken out of Facebook's hands entirely. Until then, contact an experienced estate planning attorney to help you make arrangements for your “digital assets” pending future legislation.

Reference: Facebook Newsroom ( February 12, 2015) "Adding a Legacy Contact"

Effects of the Supreme Court’s Ruling on Same-Sex Marriage

Last week’s historic Supreme Court decision, Obergefell v. Hodges, affirmed a constitutional right to same-sex marriage in all 50 states, opening up tax, estate planning and employee benefits opportunities for couples in the 13 states that have not permitted same-sex marriage. For one, same-sex married couples may be able to claim state income tax refunds. They no longer have to worry about state estate taxes at the death of the first spouse. And they may save on health insurance at work.

 

Forbes responded to the recent Supreme Court ruling with a very thorough article titled “Tax, Estate Planning, Benefits Opportunities After Supreme Court's Same-Sex Marriage Decision”  that describes its effect and the ramifications. Here are a few of the important changes that the Obergefell ­decision will have on tax and estate planning:

 

Income Taxes. Married same-sex couples will now be able to file joint state income tax returns. This usually means lower taxes than for two people filing individual returns. The article notes that the changes apply retroactively to open year tax returns. As a result, those couples who were married out-of-state should file for refunds for past years.

 

Gifts. One notable benefit of married status is that an individual can make unlimited gifts to their spouse without any federal or state gift tax liability. There are no federal gift tax bills now for same-sex couples buying a house. Now if they purchase a home together, even if each contributes a different amount towards the purchase price, they own the home jointly without gift tax issues.

 

Estate Planning. The Supreme Court’s decision means that same-sex couples can make use of the spousal exclusion in their estate planning. This lets spouses leave one another property without paying estate taxes when the first spouse passes away. A ruling last year gave the federal right to same-sex couples, and last week’s case extended it to the state level. Intestacy laws also now apply to married same-sex couples: they will be able to inherit property in the event that a spouse dies without a will.

 

Divorce. There are now no issues of support rights with same-sex marriages recognized. Also, where same-sex couples can get divorced isn’t an issue, as every state will grant a same-sex divorce.

 

IRA rollovers. The article advises to check IRA beneficiary designation forms, because when a spouse inherits an IRA, there’s a special exception that permits a surviving spouse to immediately take distributions until age 70½. This will stretch out the tax deferred payments over the surviving spouse’s lifetime and reduce federal and state income taxes.

Reference: Forbes (June 26, 2015) “Tax, Estate Planning, Benefits Opportunities After Supreme Court's Same-Sex Marriage Decision”

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