Beneficiary Designations
A lot of people are well-intentioned in trying to put things in place for themselves, children and future spouses or partners but they usually do not act on their intentions, Roberts said. As a result, many individuals who have gotten divorce have had to change their beneficiary designation on life insurance policies, IRAs, and similar documents that transfer at death through the law. Because it created a problem, most states have adopted an automatic revocation statute, which says that a designation you make while you were married is automatically voided by the divorce process. There, however, are a few exceptions, one of which is if the divorce decree specifies that the designation remains to the ex-spouse. So it is important to know whether your state has an automatic revocation statute. Roberts further noted that even if you are in a state that does not have an automatic revocation statute, your client could still be impacted because some custodians have included the language into adoption agreements for their accounts.
Cohabitation And Re-Partnering
Whether to cohabitate or get married after divorce is an issue many older people wrestle with, noted Catherine Seeber, vice president and CEO of CAPTRUST. Seeber said it is important to have the “what if …” conversation with clients. She relayed a story where a woman decided to cohabitate with someone she met after a divorce to save money. But three months into living together, he became terminally ill and she ended up becoming the caregiver, using the proceeds from the sale of her home to take care of her partner. “Whose responsibility is it if something happens to one of us and what happens to our finances? Those are the conversations that we really need to be cognizant of with our clients ahead of time,” she said. Further, Seeber said because divorced clients more than likely will meet someone else, during the grieving period they need to make an agreement with themselves as they think about what went right and what went wrong and memorialize it, so they can revisit it when they do meet a new person.
According to census data, the rate of older widowed or divorced people cohabitating has risen 75% since 2007.