Compliments of Our Law Firm,
Written By: The American Academy of Estate Planning Attorneys
Not long ago, wives were “silent partners” when it came to estate planning.Husbands were the ones in charge of long-term planning and major financialdecisions. In fact, estate planning attorneys often advised wealthy men to leavetheir assets in trust for their wives, so that a trustee other than their wifecould manage and preserve the family fortune. It was assumed that a widow wouldnot have the skill or the experience necessary to responsibly manage the moneyshe inherited from her husband.
The role women play in a family’s financial affairs has changed dramaticallysince those times. There are three times as many women in the workforce as therewere 50 years ago, and the average woman’s earning power has increaseddramatically. This means that women have taken on a more active role in managingtheir families’ finances and in making important long-term planning decisions.
At the same time, women tend to live longer than men do, and the average womanstill earns less over the course of her lifetime than the average man. This meansthat the estate planning stakes are higher for women. Still, too many womenremain silent when it comes to estate planning for themselves and their families.Here are five things every woman needs to know about the importance of estateplanning.
- If you have young children, you need a Will. It is hard for a mother to imagine not being there for her children as they grow up. But here’s an even scarierprospect: having no input into who raises your children in the event of yourdeath.The only way to communicate your wishes concerning guardianship of yourchildrenis with a Will. If you die without a Will that designates a guardian for yourkids, a judge will make this monumental decision without any input from you.Without your guidance, the guardian your children end up with may or may not bethe person you would have chosen.
- A Financial Power of Attorney can keep you and your family out of court.
Anotheressential estate planning tool for women is a Durable Financial Power ofAttorney. You use this document to designate someone you trust to manage yourfinances in case you become disabled. You need a power of attorney and, if you’remarried, so does your husband. If you become disabled without this importantdocument, your family members could find themselves spending time and moneyfiling a petition in Probate court simply to be able to pay the bills, refinancethe house, or access your financial accounts. This is especially important if thewife generates the primary income in the home.
- A Durable Power of Attorney for Healthcare. This estate planning tool is
similarto a Financial Power of Attorney, except that it lets you designate an agent tomake medical decisions for you if you’re unable to make these decisions foryourself. The medical power of attorney gives the agent the authority to makemedical decisions for the disabled person. But, you also need a HIPAAAuthorization which designates who can have access to your protected confidentialmedical information. You need both of these, and so does your husband. Withoutthese documents, doctors might be unwilling – or unable- even to talk to a spouseabout a patient’s medical condition or treatment options if the patient iscritically ill or otherwise disabled.
- A Revocable Living Trust can help you avoid probate. Probate is the court-supervised process for distributing a person’s assets after he or she dies. Thisprocess is necessary if you die leaving behind property solely in your name. Manypeople believe that having a Will allows you to avoid probate, but this is nottrue. A will simply replaces the state’s default of “intestacy” with yourpreferred recipients.The Revocable Living Trust is a popular estate planning tool for avoidingprobate. You set up the trust while you’re alive, and it holds title to yourassets, allowing you to retain control over your property during your lifetime.When you die, the trust still exists and still holds title to your assets.Because the trust does not die, there’s no need for probate. Instead, a trusteeyou’ve appointed follows your instructions for distributing the assets held bythe trust. The trust can continue after your death. It can provide distributionto your husband and children while protecting your children and assets from anyremarriage by your husband.
- You Should Keep an Eye on Your Beneficiary Designations. If you haveretirementaccounts or life insurance policies that allow you to designate a beneficiary,it’s important to periodically review your beneficiary designations. Thebeneficiary designations determine who inherits these assets, even if your Willsays otherwise. Your estate planning attorney can help you make sure yourbeneficiary designations work with the rest of your estate plan to meet yourgoals for your loved ones. When it comes to estate planning, women have a variety of concerns to juggle:children with special needs, aging parents, estate and income taxes, andprotection from creditors and divorce are just a few issues you may need to face.It is important that both spouses are involved in the estate planning processfrom the beginning. Your estate planning attorney can help you craft a plan thattakes care of you and your loved ones – allowing you and your family to reap therewards of smart planning now and for years to come.