Stern Advice: Adult kids of divorce face extra burdens

WASHINGTON (Reuters) - Children often have it rough when their parents divorce, but grown up “kids” may have it even rougher.

A woman walks up a staircase in Central Park during a snowstorm in New York December 19, 2008. REUTERS/Lucas Jackson

Adult offspring whose parents split up later in life face the usual and expected psychological issues: “They may feel like ‘everything I thought was real, isn’t,’” says Diana Mercer, an attorney-mediator and author of several books on divorce.

But they also face a series of financial challenges that their cohort with married parents don’t have to deal with, Mercer said. Young adult children of divorce may find their college fund ravaged; they may see their family home fall into the hands of Dad’s new girlfriend or Mom’s new guy. They may feel financially responsible for their parents at an early age, and have to care for single aging parents who won’t take care of each other.

And, they may leave their own finances untended. So-called ACODs (Adult Children of Divorce) often exhibit a failure to launch, says Mercer, co-author with Katie Jan Wennechuk of “Making Divorce Work: 8 Essential Keys to Resolving Conflict and Rebuilding Your Life” (Penguin/Perigee 2010). They may fail to complete their education, line up “grown-up” jobs, or feed their own savings.

These are problems likely to affect more young and middle aged adults as more oldsters go separate ways. As many as one in four divorces now occurs between partners who have been married for 20 years or more, according to Gabrielle Clemens, an attorney and divorce financial planning specialist with UBS Financial Services.

What’s an ACOD to do? Here are some tips:

-- Take care of yourself. Somebody’s got to, right? Don’t neglect your own career or savings plan because you’re worrying about Mom and Dad. If anything, you may need more savings than other people: You stand a bigger chance of losing parental support and the family inheritance.

-- Introduce a financial planning component into the divorce talks. If your parents are still hammering out their agreement, let them know that, by using the latest divorce financing techniques, they can keep more money for everybody. For wealthier families, it might mean setting up trusts that keep properties protected for the “kids,” says Clemens. Dividing up houses, retirement funds and other assets in a tax-smart way can save money, too.

-- Research long-term care insurance. In intact marriages, the first partner to suffer illness or decline is usually cared for by his or her spouse. Older divorced couples may not find other partners to care for them, or they may end up caring for partners that have no relationship to their own children. So children of divorce can end up with two aging parents in two different living situations and less cash to deploy hiring help.

Long-term care insurance can be problematic: Some companies have raised premiums dramatically; others have dropped coverage. But a good policy could really help a family later in life. If you can find one for your parents, you may be able to encourage them to buy it as part of their settlement. (Though, as Clemens points out, you can’t compel them to keep up the premiums in the years to come.)

-- Ask for what you want. It may sound bratty to say “don’t forget to give me the house” while your parents are struggling through their split. But family heirlooms? It may make them feel good to know that they mean something to you. Don’t let your mother’s ring or the dining table you all shared during happier times disappear into the divorce. Tell them you cherish those items, even if they don’t.

-- Look after the neediest parent with some financial advice and education. It’s usually, though not always, Mom who is left with lower earnings potential and less experience managing money. She may be left with a house she can’t afford, or a large lump-sum settlement that will have to last her the rest of her life. She probably doesn’t want a know-it-all kid to add to the mix, but perhaps if you bought her a couple of sessions with a good, fee-only financial adviser? That could work.

Reporting by Linda Stern; Editing by Gunna Dickson