Archive for Saturday, August 27, 2005

Say ‘I do’ to long-term financial plans

August 27, 2005

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Q: Six years ago, my husband and I divorced after 48 years of marriage, and both of us remarried. Unfortunately, his second wife fell on their honeymoon, was hospitalized, had a stroke and, after spending the better part of three years in a nursing home, died. Because she had few assets and little income, my former husband wound up footing most of her nursing home bills that, with stock market losses, obliterated his share of our assets.

My second husband, who was as healthy as a horse and five years my junior, was diagnosed with Alzheimer's disease two years ago. The illness has taken its toll rather quickly, and he is now in a nursing home because I am no longer able to care for him at home. I am estranged from my two children, who are still peeved because I divorced their father. I was pretty much at my wit's end until my former husband and I began talking. We now talk to each other daily, see each other for dinner, and get along better than we did when we were married. In all likelihood, my second husband's illness will devastate me financially because he refused to do any planning, and my share of the divorce settlement is in jeopardy.

My former husband and I, both in our late 70s, have learned that we left too many questions about our relationship unanswered when we divorced and were ignorant about the pitfalls of remarriage. We now realize that our lawyers were quite oblivious to the problems that would be facing us in our waning years and did not counsel us about our long-range needs. Don't get me wrong. I am not blaming anyone, but just stating facts. Even though my ex and I both know there is no solution to the dilemma in which we now find ourselves, I hope you will print this letter to let your readers know the grass is not always greener.

A: With the aging population growing by leaps and bounds, consideration of the financial risks attendant to remarriage in later years is essential, but often lacking. Matrimonial lawyers who represent elderly clients, not to mention clients with elderly parents or disabled children, must take a proactive role in helping to plan for post-divorce issues - skills that many lawyers do not have. As you have learned, it's not just at the time of divorce that these important questions raise their ugly heads. It also is at the time of remarriage and, in some instances, cohabitation.

Here are just some of the areas where expertise and planning are needed before divorce, remarriage or cohabitation:

After divorce

¢ Protecting of Social Security, pension, health care and related benefits;

¢ Including use of long-term care insurance as a part of the divorce package, and premarital agreements to try to absorb a large part of the potential cost of nursing home care;

¢ Finalizing temporary and post-divorce estate planning that includes new wills, powers of attorney and health care documents; and

¢ Resolving life insurance beneficiary designations and policy ownership, benefit plans, and how to handle assets that may be held in joint ownership or some other shared-ownership arrangement.

Remarriage/cohabitation

¢ Investigating long-term care issues - including the effects and risks of co-habitation agreements, prenuptial agreements and postnuptial agreements (the latter two offer no protection against your responsibility for long-term care expenses)

¢ Funding alternatives for long-term care, asset-preservation planning and Medicaid eligibility - important issues for seniors even thinking about remarriage, for those with disabled children, and for those who now receive public benefits or may one day need Medicaid;

¢ Planning for incapacity and disability through powers of attorney and health care documents;

¢ Considering guardianship and conservatorship options and risks;

¢ Detailing grandparent visitation rights - an increasingly important issue as our mobile society divorces; and

¢ Planning for disabled spouses and children through special needs trusts and other documents.

Clearly, there are many more issues, but these underscore the need for matrimonial lawyers to pay attention to and understand the long-term problems of their clients, and to advise them appropriately. It also is very important for those seniors who decide to divorce to educate themselves - before the fact - about the basics and then insist that their lawyers factor these important issues into the equation to make sure those seniors receive proper advice.

- Jan Warner is a member of the National Academy of Elder Law Attorneys and has been practicing law for more than 30 years. Jan Collins is editor of the Business and Economic Review published by the University of South Carolina and a special correspondent for The Economist.

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