Taking Care of Mom and Dad: Caring for Divorced Mom
The increase in the number of divorces has shifted the way older women support themselves through their later years when they don't remarry and can't rely upon things like pensions and 401(k)-style plans. Hundreds of thousands of women in their 60s are having to work because they lack the funds to retire. When they got divorced, many lost their husband's share of the pension among other things vital to living comfortably.
Until the late 1990s, widows outnumbered older divorced women. But now, for the first time in history, divorced women outnumber widows.
If your mom is still working, she may be too embarrassed to come to you for help. She may have failed to negotiate well in her divorce and feel stuck in the working world for the rest of her life. Looking for ways to help her plan for retirement would be a great way to start communicating about money and her future. Retirement is generally easier -- financially -- for men. Often, women who took time off to raise children have a hard time meeting those pension requirements and saving sufficiently for their own retirement.
The point here: Don't assume that you mom is taking care of herself sufficiently, no matter how savvy you think her accountant and "friends" are. Help her take charge of her finances and get her set up for retirement.
Although legislatures and courts have done much to assure that people (usually wives) get a fair share of employer-sponsored pensions, insurance and other benefits if their spouse dies, the situation is very different when it comes to divorce. In such cases, divorced moms can be left with nothing.
Many states have laws that automatically eliminate ex-spouses as beneficiaries of such things as employee benefit plans, insurance policies, annuities and individual retirement accounts. And questions about the intent of a dead ex-spouse have generated enormous amounts of litigation. The Supreme Court has ruled that when employee benefits are concerned, state laws are preempted by federal law. For example: The court, in a case from Washington state, held that the 1974 Employee Retirement Income Security Act (ERISA) overrides the Washington law. Thus, the beneficiary specified by the employee still gets the benefits even though the couple had divorced.
In that case, a Boeing worker, who had designated his wife as the beneficiary of his company-provided life insurance policy and pension plan, died following a 1994 car accident two months after divorcing her. He left no will and his ex-wife remained the named beneficiary on the pension and the $46,000 life insurance policy. For inheritance of such assets, Washington's law treated ex-spouses as if they had died on the day of the divorce.
Two of the man's children from a previous marriage sued, arguing that the Washington law disqualified the ex-wife as beneficiary and in the absence of a qualified named beneficiary, the proceeds should pass to them as the heirs.
The children lost in the trial court but won on appeal. But, finally, the U.S. Supreme Court reversed the appeals court decision.
