Gray Divorce Considerations

Divorces involving older clients (gray divorces) are on therise.  A few important points to considerfollowing a gray divorce include how to divide the retirement account and whatto change concerning the estate plan. 

Pension plans can be divided using a Qualified DomesticRelation Order (QDRO).  A SeparateInterest QDRO divides a pension plan by setting aside one spouse’s share, inessence treating the non-participant spouse as if he or she had also been anemployee.  It is important to note if theretirement plan is already in pay status, because most plans won’t allow a separateinterest if participants are already collecting from the plan. 

A Shared Interest QDRO bases the pension share of thenon-participant spouse on the life expectancy of the participant spouse.  Again, it is important to note the pay statusof the retirement plan, because “most shared interest plans will not allow theparticipant spouse to name a survivor beneficiary if one was not named uponretirement, nor can the participant spouse cancel a survivor benefit if one wasprovided for when the plan went into pay status.”

Under the Massachusetts Uniform Probate Code, divorce willrevoke wills, life insurance, trusts, and bequests to relatives of anex-spouse.  But following a divorce, thebest practice is to go ahead and update the will as well as the durable powersof attorney and heath care proxies.

See Andrea Dunbar,Gray Divorce: Retirement Accounts andEstate Planning, Massachusetts Divorce Law Monitor, May 13, 2013.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.