OLDER DIVORCING MEDICAL PROFESSIONALS

“GREY” – “Silver Splitter” – “Diamond Divorcees”

By Anju D. Jessani MBA APM®

By Dr. David Edward Marcinko MBA CMP™

While marriages are more apt to break-up around the seven-year mark, not on a silver anniversary, as divorce has become more common, divorce among older people has also become more common. When divorce does occur in later years, it can present more complicated financial issues when compared with earlier breakups, says Gregg Parish with the College for Financial Planning.

If for example a party dies or becomes incapacitated during the divorce, the surviving spouse will complete retain control of the finances. A common situation Parish says is when a couple owns a home in joint tenancy with rights of survival. Thus, is one spouse dies, the other automatically inherits the house. Parish recommends that older couples in the throws of separation situation, change the ownership to tenants in common, in which each party is considered to own half the property.

Another area older physicians going through a divorce should be especially cautious about is inheritances or gifts from their own parents. They may want to stop or delay distribution of their estate to you to reduce the chance the property would become mixed into marital property. Or the recipient might put any gifts or inheritances into a separate account or trust.

Alimony is more prevalent among this age group of divorced couples. It is not uncommon to find a woman who may not have employable skills, and who must rely on her former spouse for support.   As is the case for child support payments in younger parties, steps should be taken to ensure continuation of funds to the recipient if the obligated party dies before the recipients through instruments such as life insurance.

For most older divorcing couples, after their house and their pension, their next most valuable asset is their Social Security rights. Each party vests in the other’s Social Security account after ten years of marriage. That means that even a non-working spouse can usually collect 50% of benefits of the earning spouse; alternatively, the spouse with lower earnings can either collect benefits based on their own earnings, or collect 50% of the benefits their spouse is entitled to. This collection does not impact how much the higher earning spouse can collect. You can learn more about Social Security benefits and rules by contacting the http://www.ssa.gov.

What is often missed in the analysis of divorce is the inequity in Social Security benefits for the non-working spouse or lower earning spouse after separation or divorce. The issue of Social Security benefits can easily be addressed in the divorce agreement by stipulating that the parties will equalize Social Security benefits with the higher earning spouse providing to the lower earning spouse, one-half the difference between the payments provided by the Social Security Administration to each of them. As Social Security benefits are taxable, it is further recommended that these payments be regarded as alimony, and therefore will be taxable to the recipient.

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Another divorce area often overlooked, given today’s older physician population, is elder care obligations. For example, if a doctor is involved in the care and financial assistance of an older family member, this must be placed on the table at the divorce resolution planning discussions. America is aging and 25% of it population is sixty or older. Every seven seconds someone turns fifty. It is not unusual to live many miles from aging parents.

Imagine the impact if an in-law is in a long-term care facility that is dependent upon the financial help of the children who now get divorced? What happens to the elder persons’ ability to meet their financial obligations and stay in the current facility? How can quality care be coordinated? Who will monitor the ongoing health, mental and physical issues? When does the aging parent need in-home care? Assisted living arrangements or a skilled nursing facility? Yet, the generation of medical professionals between the ages of forty and sixty are dealing with aging parents at a same time their children are entering college. This double financial squeeze has created a new set of eldercare issues.

Most cities and local government agencies are addressing this issue and many non-profit organizations are attempting to fill the gap in this growing societal issue. The following information resources are helpful in this regard: http://www.eldercaredierctory.org, http://www.medicare.gov; http://www.medicaid.gov; http://www.careguide.com; http://www.seniorhousing.net; http://www.caregiver911.com; and http://www.n4a.org.

ACKNOWLEDGEMENTS: To John R. Connell MBA JD CPA PFS Denver, Colorado.

Conclusion

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Risk Management, Liability Insurance, and Asset Protection Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™8Comprehensive Financial Planning Strategies for Doctors and Advisors: Best Practices from Leading Consultants and Certified Medical Planners™

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