Complete Guide to Estate Planning for Women

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Women have taken on a greater role in raising their family, advancing in their career, being caretakers, and owning businesses. Many are single mothers and/or have embarked on a solo career path, taking on high paying professional jobs. Women face unique challenges when it comes to protecting their assets, choices, and loved ones. That’s why estate planning is critical for women.

What is an Estate Plan?

Before we get into why women should have an estate plan, let’s look at what an estate plan is all about.

An estate plan allows you to control your assets, health care choices, and last wishes, and protects you and your loved ones while you are living and after you die. A Will, Power of Attorney, Revocable Living Trust, Health Care Proxy, and Pet Power of Attorney are parts of an estate plan – a set of legal documents where each has a specific purpose.

You do not have to be wealthy to have an estate plan. If you own a home, a car, property, bank accounts, a business, and investments – whether they are large or small – you have an estate. And it needs to be protected.

If you don’t have an estate plan and you die or cannot make your own decisions, the state steps in and takes control. In the event you have minor children, a court will appoint a guardian.

Just imagine, everything you worked hard for would be divvied up and given to people you may not want to have anything. Your children could end up with a stranger. An estate plan lets YOU choose who gets what and puts YOU in control.

Why Women Should Have an Estate Plan

Retirement can be quite different for women than men, so they need an estate plan tailored to their needs. Did you know that women typically outlive men? Usually by about 5 years? According to the US Census Bureau, 36% of women age 65 and older are widowed, compared to 12% for men in the same age group. When it comes to caring for a spouse or family member, women far outnumber men in the role of caregiver. The Institute for Aging reports that 75% of caregivers are women and they spend as much as 50% more time providing care than their male counterparts. What this means is that women are more likely to be on their own or in a custodial situation during their retirement years. Typically, women spend much of their life taking care of their family and maybe their aging parents as well, and they do not take the time to plan for their own future needs.    So, what about you? Who will make decisions for you if you become ill? What happens to everything you own when you pass? Regardless of your age, marital status, and whether you’re wealthy or not, a comprehensive estate plan protects your assets and choices.
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Protect Your Possessions

Just because your husband has an estate plan doesn’t mean you do not need one. Sure, when your spouse dies, all the assets you jointly own go to you. Even though you would possess everything, you are on your own. Your own estate plan is essential to ensure your financial security and make certain that your assets will be properly distributed to your loved ones and/or charities when you die.

Not having an estate plan can be disastrous. This is what can happen:

  • Your assets could go to unintended beneficiaries
  • Your estate could be broken up and sold
  • Nasty litigation could erupt among your loved ones if they disagree about what they believe should be their share of the estate
  • Legal decisions made by a court
  • Loved ones facing huge fees and taxes

Having your own estate plan in place ensures:

  • Assets go to beneficiaries of your choice
  • Your wishes are carried out
  • Minimized taxes and settlement costs
  • Peace of mind for your loved ones

Protect Yourself

An estate plan isn’t just for dispersing your worldly possessions after you pass. It also protects you while you are living. If you become seriously ill and are in a situation where you can no longer make your own decisions, you can rest assured that your medical treatment choices will be honored and your financial affairs taken care of with an estate plan.

Too many women wait until a life changing event happens before they decide to create their own estate plan: the death of a spouse, a marriage, divorce, or a terminal illness. Having a plan in place before life happens protects your assets and your choices.

Estate Planning Documents You Should Have

Each document can be customized for your particular needs:

Will

You want your last wishes carried out when you die. The Last Will and Testament ensures that your assets will go to the beneficiaries of your choice like charities and family members. It also allows you to name a guardian for your minor children.

Revocable Living Trust

This allows you to set aside and manage assets while you are alive, and when you pass. Assets placed in the trust are transferred directly to beneficiaries after you die. Unlike a Will, a Trust is not subject to probate – a legal process where a court validates a Will. Since it’s revocable, this Trust can be amended at any time as your life changes.

Power of Attorney

You authorize a person to manage your financial affairs and make decisions for you if you cannot. The Power of Attorney can also manage your business and make gifts to charities according to the parameters you set.

Health Care Proxy

If you have a medical crisis and become incapacitated or terminally ill where you cannot make your own decisions, the person you name as your proxy will be your voice. In this document, you list the medical treatments you want and do not want as well as end-of-life care preferences.

Pet Power of Attorney

Have peace of mind knowing that your pet will be cared for if you die, go on vacation, or become debilitated. The person you appoint as Pet Power of Attorney will have legal authority to take care and custody of your pet, and authorize expenses for your pet’s care according to the money you set aside for that purpose.

All these documents should be reviewed periodically and updated as your life and the law changes. They should be stored in a digital vault where you and the people of your choosing can have quick and easy access.

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How a Woman's Role in Finances & Estate Planning Has Changed

The relationship between women and money has changed in recent years. Past generations of women were dependent on their husbands’ salaries for financial security. Women have since come into their own – many are now the breadwinners and sole wage earners.

Since women are living longer, they often inherit assets twice: not only from their parents, but also from their husband. Also, many women own businesses or are entering such professions as attorneys, doctors, or executives that command high salaries. Today’s women are major players in the financial world.

According to Bankrate.com, most women associate financial strength with saving for their security and family. Men, on the other hand, associate wealth with power. 

Despite the fact that more women are owning and managing assets, most still put off creating an estate plan. In fact, a recent poll shows only 14% of women have some type of an estate plan in place. The lack of an estate plan can lead to liabilities when it comes to distributing property and financial accounts to your children or other beneficiaries when you die. 

As mentioned, women’s life expectancy has increased. As we age, we lose our cognitive abilities. Dementia and Alzheimer’s Disease are sadly common in our golden years. Because of this, you need to have a Health Care Proxy and Power of Attorney so your medical wishes and financial matters will be managed. 

Trusts, such as a Revocable Living Trust, can be crafted to secure maximum financial benefits while conserving and using wealth during your life. This would ensure that sufficient cash and other liquid assets will be available to pay estate taxes and settlement costs while minimizing those taxes and costs. You also want to make sure the distribution of your assets fit your familial and charitable intentions. A Last Will and Testament and a Revocable Living Trust will do the job.

What Married vs. Single Women Need to Know About Estate Planning

There are some different perspectives when it comes to estate planning for a married or a single woman.

Married Women

Many married women don’t believe they need a Will or estate plan because their husbands have one. Or, they think they don’t own enough to justify creating an estate plan. Both beliefs are wrong. Here’s why: It’s the wife who most likely will be widowed. In this case:

  • You own all the assets 
  • You need a Will or a Trust to name beneficiaries you want assets to go to
  • Who will make your financial and health care decisions for you if you cannot?

Your own estate plan protects your assets and carries out your wishes in the event of the death or incapacity of your spouse and if something happens to you. A wife should coordinate the creation of her estate plan with her husband so that both can be on the same page when it comes to bequeathing their assets.

Single Women

If you own a home and have investment and retirement accounts, they need to be protected.

Since you are single, there’s no clear individual who should receive your assets when you pass. So, you need a Will where you can name the beneficiaries you want to receive your possessions. 

You also need people in place to make your medical and financial decisions, should you get into an accident or become seriously ill. A Health Care Proxy and a Power of Attorney will allow you to appoint these people and list your choices. 

Due to not having the benefit of a marital tax deduction, it’s typically more expensive for a single woman to bequeath assets to beneficiaries. You can set up a Revocable Living Trust, where certain assets would provide income for you during your lifetime and reduce tax liabilities when they are distributed upon your passing.  

Provisions for Minor Children

Whether you are single, married, divorced, or widowed, if you have minor children, it is vital that you have a Will that names a guardian who will care for them if you die or are impaired.

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Women & Myths About Estate Planning

Let’s debunk a few myths about some women’s views on estate planning.

Myth: An estate plan is for older women

The Truth: You are never too young to start estate planning. You never know what the future holds. Sickness, death of a spouse or family member, becoming a caretaker – these are life changing events you need to be prepared for. They can happen at any age. Set up your estate plan early and it will be ready when you need it and give you peace of mind in the meantime.

Myth: An estate plan is for the wealthy

The Truth: Everyone has an estate. It doesn’t matter what the value of your home or how much or little you own; you need an estate plan. When you die, your property, bank accounts, retirement funds, and valuables need to be distributed. You want your possessions going to the persons or charities of your choice, right? A Will lets you do this. Without a Will, the state makes those choices.

You may be surprised how quickly the value of your estate grows over the years. When you are in your later years, you or your spouse may be in a situation where long-term care is needed. In this case, you would need to qualify for such benefits as Medicaid to cover costs. A smartly crafted estate plan would protect your hard-earned assets that otherwise could make you ineligible for Medicaid.

Read More: What Assets Am I Allowed to Have to be Eligible for Medicaid?

Myth: I’m married, I don’t need an estate plan 

The Truth: It’s true that jointly owning assets makes dividing and bequeathing them easier. However, not all assets are created equal. Some need to go through probate. Additionally, what happens if you and your spouse die together? Are there certain things you want to leave for your children or charities? If your spouse dies and you become ill, who will make your decisions? A comprehensive estate plan covers it all.

Myth: My family will take care of things

The Truth: Although we like to think our loved ones will step up in a time of need, you can’t always depend on that. If a crisis strikes, say a medical emergency when quick decisions must be made, disputes can arise among family members as to what course of action to take. Having legal documents spelling out your decisions and choices and appointed persons to carry them out ensures your wishes will be honored.

Common Mistakes in Estate Planning

Women need a proper estate plan to ensure that their assets and loved ones are protected. Don’t make these mistakes:

1) If I die, my spouse receives everything without probate

If you have property or a financial account that has your name only, it will go through the probate process before your spouse receives it. Jointly owned assets that list both names typically will transfer to the surviving spouse. Make sure all your assets are titled in both names and check your estate planning documents to be sure they properly list all assets and beneficiaries.

Read More: Probate: What is it? Must All Wills go Through Probate?

2) Failure to have an estate plan when your marital status changes

If you get married or divorced, you need to update your existing plan to reflect the change. Entering a marriage with existing assets like retirement or bank accounts and not having an estate plan protecting them can result in legal battles if something happens to you. You need your own set of estate planning documents such as a Will or Trust to safeguard those assets. Should you divorce or become widowed, you also need to change your plan accordingly. Assets need to be retitled in your name in the event of your spouse’s passing, if you remarry, or you get divorced.

3) I’m single, I don’t need a Will

This is a widespread misconception among single women. Everything you own – financial accounts, property – needs to be protected. If you don’t have a Will and you die, all your assets will be taken over by the state and dispersed according to that state’s intestacy law. A Will or Trust ensures your assets will go to the beneficiaries of your choice. Also, not having a Health Care Proxy and Power of Attorney can result in a court making decisions for you if you are impaired. These documents allow you to appoint someone you trust to carry out your directives in the time of a crisis.

Be Prepared with an Estate Plan

Estate planning is all about being prepared for the unforeseen and the inevitable. Regardless of your marital status or how much or little you have in the bank, women need an estate plan in place that will ensure your last wishes will be carried out and your choices, while you are alive, will be honored. At some point in your life – maybe it’s now – you will be the sole estate owner, and you need to be protected.