According to the Australian Bureau of Statistics (ABS), the median age at divorce is rising for both men and women with ABS statistics showing the median age at divorce is now 42.8 for women and 45.9 for men, compared to 38.6 and 41.4 in 2000.1
The term ‘grey divorce’ was coined by US author, Alex Kuczynski, in 2008 in her book titled “The 37-Year Itch,” and is now used to describe the increasing number of older people splitting up after very long marriages.
But divorce at any age is tough. When you’re older at the time of divorce, it’s crucial that you consider how you split your assets and the implications this will have for your estate, especially if you have adult kids or a blended family.
Here are some tips to help you prepare for the changes ahead and protect your legacy.
Revisit your will
Revisiting your will is one of the first and key steps in the divorce process to ensure you pass on your assets to the people you want. In most Australian jurisdictions, a divorce does not automatically revoke a will, but it does revoke any clauses that mention the ex-spouse. For example, if you have appointed your ex-spouse as an executor or trustee, those appointments will no longer apply, and new people will need to be appointed to those roles. A comprehensive estate planning review will also include updating the beneficiaries of assets outside your estate, such as superannuation and insurance.
Wind-up family trusts
At some stage during your marriage, you and your partner (or ‘spouse’ in legal terms), may have established a family trust, with the intention of passing assets on to your children or grandchildren. A divorce will probably mean that any family trusts will be wound up and the assets re-distributed. Depending upon your financial situation (and it’s a good idea to obtain independent financial advice at this time) you might wish to establish your own family trust to hold some of the assets.
Re-marriage considerations
Updating an estate plan is also a good idea and can be more complicated if one party has remarried or plans to do so, and there are children from the first marriage The party who is re-marrying will need to give careful thought to how they wish to provide for their new partner, while also leaving something for the children of their previous marriage. One option is to provide a “life interest” in the estate or part of the estate (such as the primary residence of the couple) for the new partner. This means that the estate assets will be held on trust for the benefit of the new partner (“the life tenant”) and they will be able to live in the property or receive the income payments from investments, for example, for the remainder of their lifetime. After they pass away, the estate assets could then be distributed to the willmaker’s children.
Blended family concerns
It’s vitally important to consider how property is owned by a couple when there is a blended family involved. If a couple owns all their property jointly, then when the first of them dies the “law of survivorship” will apply, meaning that all property automatically transfers into the sole name of the survivor. This may mean that any children of a previous marriage miss out completely, depending on the relationship they have with the surviving partner. If a will-maker wants to ensure that his or her children from a previous marriage receive a share of the estate, they may need to sever a joint tenancy in a property they own with a new partner.
Confirm new EPAs
In the lead-up to, or following your divorce, you will need to choose a new person or people to appoint in your Enduring Power of Attorneys. If you’re unsure who to appoint, or you don’t have anyone that you would trust to carry out this role, then you could always consider appointing an independent trustee company as your financial attorney.
Keep up the communication
Communicating the changes in wills and overall estate plan to family members can help reduce potential family conflict and angst during the divorce process and long afterwards. Unfortunately, this is not always possible if there is a lot of ill feelings and estrangement amongst the family members. But if you can find a way to keep everyone informed of your intentions, without generating further conflict, then there will be fewer unexpected surprises when the time for the will to be administered.
Take a proactive approach
It’s important to remember that estate planning is a dynamic process even during the throes of a divorce – no matter what stage of life the divorce occurs. While it can add an extra level of complexity, its vital to keep the discussions open with your family, and well worth seeking advice from a legal professional such as your nominated estate planning solicitor or family lawyer who can set out the pros and cons before you make any decisions.
Related: Opinion: What is a Trust and why could be worthwhile for you