Estate Planning for WomenWealthCounsel
All women—married, widowed, divorced, or single; homemakers, caregivers, professionals, or business owners—need to understand estate planning and have a plan of their own in place. Here are some issues that are of special interest and application to women and their estate planning.
Children, Grandchildren, Parents, and Pets. Women are typically the caregivers and as such are naturally concerned about the care and education of their children and grandchildren. Often there are others who depend on them, too, including aging parents and even pets.
Planning Tips: If you have minor children, or are raising your grandchildren, you need to name a guardian in your will. Otherwise, if something happens to you, a judge will decide who will raise them without knowing your preference. Aging parents, a child or relative with special needs, pets, and others who depend on you need to be included in your estate planning. Special planning can provide needed care without jeopardizing valuable government benefits. Additional life insurance may be needed to provide for your loved ones the way you want. If you have sufficient assets, you can set up a gifting program or establish a trust for the education of your grandchildren and future generations.
Charitable Causes. For women who are charitably inclined, philanthropy often becomes an integral part of their estate planning.
Planning Tips: If you want some or all of your assets to go to a favorite charitable, religious, or educational organization, you must include this in your estate planning. Without a valid plan in place, state law will distribute your assets, and a charity will not be among your heirs. Some women purchase additional life insurance and use the proceeds to establish a charitable foundation or otherwise make significant charitable gifts.
Plan for Incapacity. Women, on average, live longer than men. As a result, there is an increased need to plan for physical and/or mental incapacity that can occur in your later years.
Planning Tips: Long-term care insurance, purchased in advance, can help cover the costs of incapacity and can even help you remain in your home for as long as possible. Also, plan now to prevent the court from taking control of your finances and your personal care. At a minimum, you need a durable power of attorney for assets (so someone you trust will be able to use your assets to provide for you) and a durable power of attorney for health care (so someone you trust will be able to make medical decisions for you). A revocable living trust provides excellent protection in case of incapacity; it allows you to name someone to step in and manage your financial affairs when you can’t without court interference. A living trust also contains your instructions for distributing your assets when you die, so this one document will control your assets at incapacity and death—something a will cannot do.
Protecting Your Business and Other Assets. Professional women in high-litigation areas like medicine, law, and real estate must be concerned about protecting their assets from lawsuits. Many women are also business owners and they need to plan for what will happen to their business when they are no longer involved due to incapacity, retirement, or death.
Planning Tips: Asset protection planning and business succession planning can and should be included in your estate planning. The time to plan for asset protection is before any potential threat arises. Likewise, planning ahead for business succession will give you plenty of time to grow and develop your business, groom a successor, and, if desired, find a potential buyer. If an adult child will take over the business, proper estate planning will help you provide fairly for any children not involved with the business.
Married Women. Not only do women live longer, but they tend to choose husbands who are older, which means they are likely to become widowed and live on their own for a number of years. Without proper estate planning while married, many will see their standard of living reduced during their retirement years. Those in second marriages will need estate planning that provides for the surviving spouse but does not disinherit children from a previous marriage. Also, because most married women survive their husbands, they often have the final say over who will ultimately receive the couple’s assets.
Planning Tips: Take an active role in your estate planning as a couple. Women in first marriages often leave estate planning up to their husbands, which means they usually have to deal with the consequences of any planning (or lack thereof). Knowledge is key—an unknowledgeable widow will likely be confused and uncertain, while one who has participated in the planning process will more easily understand it and even feel empowered.
Unmarried Women (Never Married, Divorced, or Widowed). If you have no children, you may want certain friends or charitable organizations to receive your possessions, but without a valid estate plan, the laws of your state will dictate who will receive them. If you are in a relationship but not legally married, your partner will not receive anything unless your estate plan provides for it. The opposite is true, too—if your partner should die before you, you will not receive anything unless your partner’s plan provides for you.
Planning Tips: You need at least the basic estate planning documents—durable power of attorney for assets, durable power of attorney for health care, and a will or living trust. If you are divorced or separated from your partner, you probably do not want this person inheriting from you or making life and death decisions for you, so be sure to update your documents (including beneficiary designations) as soon as possible.