February 2006
Volume 2, Number 2
Table of Contents

When Silver and Golden Year Tarnish
Divorce Involving the Older Client: The Key Issues

By Jennifer J. Rose

No longer the domain of the young and reproductive, divorce increasingly involves the older client whose 50-year marriage may have reached its breaking point or whose third marriage simply didn't work out. While some May-December marriages may have produced progeny, divorce among older partners seldom generates child custody disputes. Instead, issues of property, spousal support, taxes, family gifts and rifts and providing for those golden years become paramount.

The Initial Interview. The initial contact with the older matrimonial client differs from the first brush with many younger and middle-aged litigants. "I can't believe that he's leaving me after all these years of saving for our retirement" replaces the standard battle call of "She won't let me have the children for Christmas." Frequently, the older client perceives less urgency with the divorce process than does the younger client.

While many older clients often are more organized than their juniors in presenting information to counsel at the initial interview, take the time to assess the client's cognitive skills. Consider whether the client understands the process and if there are any visual, auditory or physical deficits to accommodate.

Crippling long-term health care expenses and Medicare eligibility may be the incentive for ending some elderly clients' marriages. Familiarize yourself with the Medicare Catastrophic Coverage Act of 1988 and its legislative progeny. Consultation of elder law resources for honing eligibility is essential.

Allow the older client plenty of time to consider options. A marriage 40 years in the making may not unravel itself as quickly as a short-term marriage; on the other hand, the parties may have spent the past 39 years of that long-term marriage working out the details of its demise. Divorce may not be the sole remedy - a simple separation, separate maintenance action or even an annulment in the case of a very short-term remarriage may be more advantageous to both parties.

The Family Dynamics. It is particularly important to consider the family dynamics in the case of an older client. Even though grown children may have flown the roost, it's not unusual to face an irate son or daughter whose motivations may be less driven by filial devotion than by self-interest. The adult child's interest in family business enterprises may be at risk. Parental largess extended to grown children may come to a screeching halt when each parent faces life with only half of the marital estate. Furthermore, the children may perceive that additional caretaking chores for a dependent parent may fall upon them if the able-bodied spouse has departed from the family home.

An adult stepchild's animosity toward a parent's partner may be exacerbated when a serial marriage turns sour; or, the disgruntled stepchild may be the moving force behind the breakup in an effort to preserve parental wealth that might be transmitted to a stepparent. The adult stepchild may have already taken steps to "protect" his or her parent, subverting the stepparent's property rights, redirecting a parent's assets to the child, accepting a power of attorney from the parent or becoming the parent's guardian or conservator. In these cases, it almost seems as if there are three parties to the marriage: husband, wife and stepchild.

The Competence of the Parties. Consideration should be given to the parties' competence to defend and whether a guardian ad litem should be appointed to protect the interests of one or both of the parties.

Property Issues. Property issues in the divorce of an older client take on a different hue. Frequently, younger and middle-aged clients simply haven't amassed as much property as their elders, and their premarital property is often easier to identify. By the time a long-term marriage crumbles, however, it's not unusual for neither party to recall what he or she brought into the marriage, where that property is now or what happened to it. In many cases, premarital assets have been scattered to the winds, depleted, completely subsumed into the marital estate, transferred to the children or others, or are no longer even a concern.

Inherited Property. Inherited property becomes more of an issue in the elder divorce. By the time many long-term marriages have hit the rocky shoals, the parties have already come into an inheritance. In such cases, the following issues should be considered:

- Can either party readily identify the inherited property?

- Which party inherited it?

- Where is that inheritance now?

- Has the inherited property been transmuted or commingled with marital property, losing its special status?

- Was the bequest simply spent on family expenses or a trip to Europe?

- Did the inheritance provide an income stream upon which the parties depend?

- Are there special circumstances that would justify not setting off an inheritance to one party?

Gifts. Less frequently at issue are gifts received by either party, except, of course, in the case of interspousal gifts. Age diminishes the likelihood of receiving substantial gifts from third parties. However, transfers from the marital estate to others becomes a more important issue. Consider :

- Were gifts made to the children on a regular basis, or did one party make gifts to the children or to others in contemplation of divorce?

- What pre- divorce planning has one party undertaken to the other's detriment?

- Are there investments in illiquid real estate or appraisal-defying other assets?

- Have marital assets been encumbered in an effort to frustrate property distribution?

Spousal Support. Spousal support may assume greater importance among older clients. In some cases, the notion of rehabilitative alimony simply doesn't work; age may have dimmed reasonable expectations for retooling and development of marketable job skills. The duration of one spouse's earning power and the other's need for support may come into conflict. Age and infirmity bode support needs for both spouses.

Termination or reduction of alimony carries weightier connotations for the older client than it might for the younger or middle-aged one. The following issues should be addressed:

- Should alimony terminate upon retirement, upon receipt of retirement benefits or upon death of the payor?

- On the other hand, should a scheme be created to provide for its continuation past the payor's death?

- If so, how might that income stream be assured - through life insurance, disability insurance, a QDRO?

Retirement Benefits. What kind of retirement benefits do the parties have? Most obvious is social security. The Social Security Administration's "Request for Earnings and Benefits Estimate Statement" will show the number of credits earned, the earnings record and an estimate of benefits.

If the parties currently receive social security benefits, assess the impact of divorce upon the benefits payable. Railroad retirement, state and federal governments, the U.S. Postal Service, the foreign services and the military all operate under unique sets of rules.

Consider also the following:

- Has the marriage endured the requisite decade to qualify the non-employee spouse for benefits under the mate's earnings record?

- Or, does the non-employee spouse have sufficient credits in his or her own account?

- What other retirement plans do the parties have, e.g., private pensions, qualified or unqualified under ERISA, defined contribution, defined benefit, Keogh or IRAs?

- Is the retirement plan the most valuable or a substantial part of the marital estate, or is it balanced by equivalent assets?

- Have the parties already opted for distributions from retirement plans?

Health Insurance. Health insurance may loom with greater urgency among the elderly. COBRA may not be the safety net many assume. Specifically excluded from COBRA's reach are government and employers with less than twenty employees, although state plans may provide more or less generous treatment. Former spouses of military personnel confront even more variants. Furthermore, the 36-month COBRA umbrella snaps shut when the beneficiary becomes eligible for Medicare. Who's going to pay for supplemental insurance? And what about long-term health care and disability insurance?

Taxes. Taxes present yet additional conundrums in the older client's divorce. The most obvious - the exclusion of gain from the sale of a principal residence (as recently amended and discussed in the article on page 5) - punctuates the award of the marital residence as well as the timing of its sale. The basis in property creates additional considerations in making its award. Consider the following tax-related issues as well:

- How will alimony shade each party's tax picture?

- What tax consequences lurk behind retirement plans and distributions?

- How will recapture distort the parties' income?

- Finally, the history of the parties' tax lives raises issues of unpaid taxes, liens and the innocent spouse doctrine.

Estate Planning. Serious estate planning often works at cross-purposes with effective divorce planning. Those clever steps intended to shield property from the clutches of the tax collector and creditors may have positioned the same worldly goods in the other spouse's hands. The irrevocable trust may have already set the stage for property distribution. The parties' interest and control in their property may have become fragmented for reasons of convenience as children become signatories on accounts, joint ownership develops, intentionally or inadvertently, conditional gifts are made or life estates are created. Even a simple power of attorney can tweak the best-laid plans. In addition, consider:

- Has the client granted the spouse a durable health care power of attorney or designated the other as a standby guardian or conservator?

- And, finally, what about those two side-by-side cemetery plots?

Bearing little resemblance to the garden variety divorce involving custody, child support and college education among the pre-AARP client, the geriatric divorce calls upon a broad range of practice skills.

Jennifer J. Rose, editor-in-chief of THe Compleat Lawyer, is an attorney now living in Morelia, Michoacan, Mexico.

Originally published in Matrimonial Strategist, September, 1997

Copyright © 1997 The New York Law Publishing Co.; Jennifer J. Rose

Copr. (C) 2006 West, a Thomson business. No claim to orig. U.S. govt. works. This article is reprinted with permission from West, a primary sponsor of the General Practice, Solo and Small Firm Division.

 

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