Women’s Comprehensive Guide to Estate Planning

Why Focus on Estate Planning for Women?

Longevity and Financial Security

Women generally outlive men by five to seven years. Without proper planning, this increased lifespan can lead to financial instability. Women are more likely to face changes in finances, inheritance, and guardianship issues alone, making comprehensive estate planning essential.

Care Responsibilities

Women often spend more time and resources on long-term or end-of-life care for themselves and loved ones. Planning for these eventualities is crucial to ensure that both the caregiver and the recipient are provided for.

Evolving Roles in Society

In recent decades, women have taken on more prominent leadership roles, including heading up more households, holding elected office, and making key decisions in the workforce. This shift necessitates an estate plan that reflects these responsibilities and assets.

Wealth Ownership and Management

Women today control a significant portion of the world’s wealth. Despite this, many women are slow to address estate planning, which can have a profound affect not just on their own welfare, but on the welfare of loved ones, too. It can mean excessive, asset-draining taxation. And it can result in a loss of critical support for cherished causes.

When Should a Woman Start Estate Planning?

Personal Anecdotes on Timely Estate Planning

A colleague shared two stories that highlight the urgency of estate planning for women. Her older sister—we’ll call her Sally—and brother-in-law had no estate plan. But an urgent health crisis acted as a wake-up call. When her husband fell ill, Sally was faced with the possibility of making some pretty major financial and end-of-life decisions on her own. Thankfully, he recovered—but not before the couple realized how quickly life can change. They created an estate plan that pays careful attention to the roles both spouses play in the family. It places special focus on ensuring Sally will have the assets she needs to care for herself should her husband die before she does.

Similarly, our colleague’s millennial daughter hadn’t considered estate planning despite significant life changes. She’d moved to take a new job with a higher salary and pension plan. She’d purchased a new car and a new house in her new state. And she’d recently become engaged. But when asked about estate planning, she said she’d never thought about it because she assumed she was too young, and figured that it was something her soon-to-be husband would deal with.

Both examples detail the need for women to pay close attention to estate planning.

Ideal Timing for Estate Planning

Estate planning should start as soon as significant life events occur, such as acquiring property, getting married, or having children. It’s never too early to plan, as circumstances can change unexpectedly. Many experts recommend creating an estate plan as soon as someone becomes a legal adult.

Simplifying Estate Planning

What Constitutes an Estate Plan?

An estate plan is a legal document that provides for the distribution and management of a person’s estate (their “stuff”) during their lifetime and after they die.

It ensures that the person’s last wishes are carried out, including naming heirs and naming an executor—the person in charge of handling your estate after your death. It can provide substantial tax benefits for the person, or their heirs. It is also used to make funeral plans, determine guardianships of children, distribute assets (money/property/other stuff you care about), and identify charitable beneficiaries.

What Should an Estate Plan Include?

In general, an estate plan should include:

·       Last will and testament

·       Trust

·       Living will

·       Medical Power of Attorney/health care proxy/healthcare directive

·       Financial POA

·       Life insurance policies

·       Beneficiary designation forms

·       Succession plan for business

·       Estate Executor

·       Charitable planning

You can learn more about the purpose of each of these documents by reading The Importance of Estate Planning.  

What’s the Difference between a Will and a Trust?

Deciding between a will and a trust depends on asset types, business ownership, children’s guardianship, and privacy preferences.

Will

A will names your executor, and is used to distribute assets and personal property, identify charitable beneficiaries, and identify guardianships for minor children and dependents. It can be used to make funeral arrangements and leave a charitable legacy. A will must pass through probate.

Trust

There are many different types of trusts. In general, a trust details a legal relationship in which a “trustor” (you) gives the “trustee” (whomever you choose to manage the trust) the right to hold property or assets for a “beneficiary” (the person who eventually receives the property held in trust). A trust allows assets to be passed on privately, without the need for probate.

Some estate plans may include either a trust or a will; others include both components.

What is a Living Will?

A living will outlines your medical care preferences should you become incapacitated. It, along with an advance directive and a durable healthcare power of attorney, ensures your healthcare wishes are followed and allows you to name a representative to make decisions on your behalf.

Consequences of Dying Without a Will

Dying without a will can lead to significant personal and financial consequences. A judge will decide asset distribution and guardianship of minor children, and the estate may face heavy taxation. Thus, having a will is crucial.

Do You Need an Estate Plan If You Have Few Assets?

Yes, because an estate plan involves more than just your assets and possessions. It can include funeral wishes; a healthcare power of attorney; distribution of particular heirlooms and possessions; guardians for minor children and beneficiaries, and even provisions for the care of pets.

What If My Spouse and I Share Joint Ownership?

You still need an estate plan, because joint ownership doesn’t always guarantee a smooth transition, and probate courts don’t care about your wishes unless they’re written in a valid will. Factors such as ex-spouses and children from previous marriages can complicate matters. An estate plan ensures your wishes are honored regardless of circumstances.

How Can I Support Charities Through My Estate?

There are many ways to leave an enduring legacy gift to your favorite nonprofits. Here are a few examples:

• Bequest: Designate a legacy gift to a charitable organization through your will or trust with cash, property, or a share of your estate’s assets.
• Beneficiary Designation: Name a nonprofit as a beneficiary of your retirement plan, life insurance policy, or other financial account.
• Residual Gift: Designate that whatever is left of your estate after taxes, bills, and distributions to heirs goes to charity.
• Gifts of Appreciated Securities: By transferring stocks, bonds, or mutual fund shares to your charity, you can make a significant gift, receive an immediate income tax deduction, and pay no capital gains tax.
• Charitable Gift Annuity, Charitable Remainder Trust, Charitable Lead Trust: These plans allow you to gift your assets to a charity, take a charitable income tax deduction, and provide income for life for yourself or others you name.

Choosing the Right Professionals

Selecting an Attorney

Choose an attorney who specializes in estate planning. This ensures they are well-versed in the specific laws and nuances of estate planning.

Finding a Trustworthy Financial Planner

Find a financial planner you trust to help manage your assets and plan for your financial future. A well-crafted estate plan benefits loved ones, minimizes taxes, and supports causes you care about so you can leave a lasting legacy.

FAQs

What is the difference between a will and a trust?
A will directs the disposition of your property after death, names an executor to manage your affairs, and names guardians for minor children and dependents. It can include funeral instructions, powers of attorney for healthcare and finances, and more. It must pass through probate court. There are different types of trust, but in general they detail a legal relationship in which a trustee holds property or assets for a beneficiary. A trust allows assets to be passed on privately, without the need for probate.

Why is estate planning important for women?
Women often outlive men, take on additional care responsibilities, and hold significant wealth, necessitating comprehensive estate planning to ensure their wishes and loved ones are provided for.

When should I start estate planning?
Start planning as soon as significant life events occur, such as acquiring property, getting married, or having children. Early planning is crucial for unexpected changes.

What happens if I die without a will?
Without a will, a court decides asset distribution and guardianship of minor children, and your estate may face heavy taxation.

Do I need an estate plan if I have few assets?
Yes, estate planning is about more than just wealth. It includes funeral wishes, power of attorney, passing down heirlooms, and providing for pet care.

How can I support charities through my estate?
Consider bequests, beneficiary designations, residual gifts, transferring appreciated securities, or investing in charitable annuities and trusts.

Conclusion

Estate planning is not just a legal necessity, but a personal responsibility that reflects who you are and what you value. Women’s estate plans need to account for longer lifespans, more care responsibilities, and a larger share of the world’s wealth. By taking the time to plan, you ensure that your wishes are honored and that you leave a meaningful legacy.