The Rise of Gray Divorce and Disinheritance
“Gray divorce” is on the rise. In 2017, the Pew Research Center reported that the divorce rate for Americans over age 50 has doubled in the past 25 years, and for those over 65, it has tripled.i
This trend has disturbing consequences for many adult children whose parents remarry after being divorced. Those children often find themselves disinherited after a second marriage.
Readers of this article may recall their feelings of optimism as they planned their wedding. Those feelings often give couples embarking on a second (or even third or fourth) marriage unfounded trust that their children’s interests will not be affected. Well-intentioned parents may not anticipate the fissures that eventually divide the family into two camps, each characterized by the same bloodline, and often resulting in bitter fights over money. Those who do anticipate family fights sometimes opt for co-habitation in lieu of marriage.
For example, suppose Charles and Ann divorce after 29 years of marriage, when both are 58. They have two children who are age 26 and 25, and two grandchildren. Within a year, Charles remarries Kathy, his high school sweetheart, who has one child, a 16-year-old son with severe disabilities. Unlike his new wife, Charles is relatively affluent. His children ask Charles not to marry and suggest co-habitation as an alternative, but Charles assures them that Kathy will not try to “steal” their inheritance. In his hurry to marry Kathy, Charles forgets to consult with his attorney about how to protect that promise. Charles’ children feel marginalized as their father, his new wife and her son move into a home that is much grander than was theirs growing up, and is renovated to accommodate the son’s disabilities. Their relationship with their father and Kathy becomes distant. Having procrastinated about planning for his blended family, Charles signs a simple will directing his estate to Kathy. He dies suddenly five years later and Kathy inherits his estate. Though her relationship with Charles’ children is strained, Kathy promises that they will be included in her will. Kathy contracts Parkinson’s disease and her custodial care costs deplete the estate. When she dies, the remaining assets pass to a special needs trust for her son.
What are some steps that could have protected the inheritance of Charles’ heirs after his marriage to Kathy?
- Prior to marrying, Charles could have sought advice on a pre-nuptial agreement with Kathy. Negotiating these agreements does require some sensitivity, but if handled correctly, they can protect all members of the blended family from both inadvertent and deliberate disinheritance.
- Prior to their divorce becoming final, Ann could have insisted that Charles purchase a life insurance policy for the benefit of their two children, and that the policy be held by a third-party trustee to ensure that future premiums are paid by Charles.
- After marrying, Charles could have tried to convince Kathy to sign a post-nuptial agreement that included a promise that his estate plan would ensure a fair division of assets among Kathy and his children.
- Kathy and Charles could have purchased long-term care insurance to minimize the unanticipated costs of Kathy’s custodial care.
- Charles could have made gifts to his children or funded trusts to protect the inheritances of his children and grandchildren. A fully discretionary trust that permits distributions to be sprinkled among a child and grandchildren would keep the assets out of the reach of creditors, including a divorced spouse of a child. With the gift tax exemption at an unprecedented high level, Charles could have made gifts to his children and/or grandchildren without a current tax cost.
- Charles could have structured his estate plan to direct his assets to a marital trust for Kathy’s benefit during her life, and at her death, divided between his two children or among his children and a special needs trust for Kathy’s child.
These suggestions are certainly not all-inclusive. They are intended to raise awareness of issues that you, family members or friends may face if contemplating a second marriage. If you would like to discuss, please contact the author or other members of our Private Client Practice.ii
i Stepler, Renee, “Led by Baby Boomers, Divorce Rates Climb for America’s 50+ Population,” Pew Research Fact-Tank, March 9, 2017.
ii The author wishes to acknowledge Vincent L. Teahan, Esq., whose NY State Bar Journal article, “Estate Planning to Protect Children of Divorce” (April, 2019), inspired her to write this Alert.