What You Need to Know to Protect Yourself and Your Family
Whether single, married, divorced or widowed, all women should take steps to protect their financial legacies.
Women often face unique challenges that can impact their estate planning strategies. For instance, women outlive men by an average of six years.1 Women are also increasingly responsible for household finances, controlling $14 trillion, which is more than half of the nation’s personal wealth.2
Put simply, women have a lot of resources at stake, and it’s important to consider their unique challenges when planning for the future, especially when it comes to estate planning. The following tips can help you get started.
#1 – Plan for your future.
While it’s important to keep your loved ones in mind as you put together your estate plan, it’s also important to plan for your own needs. Start by taking inventory of your financial situation, and consider how your finances would hold up to major life events.
For example:
- If you’re single, have you designated a durable power of attorney to step in should you become incapacitated? Have you designated an executor to settle your estate, ensure your debts are paid and distribute your assets according to your wishes?
- If you’re married and your spouse dies before you, do both of you have adequate life insurance to cover your expenses? Will you continue to receive spousal benefits for Social Security and pension payments?
- If you’re divorced or widowed, have you made timely updates to your estate plan and beneficiary designations?
Your wealth manager can help you consider all factors that may influence your estate planning decisions and implement a plan that works for you.
#2 – Know your assets.
Next, take inventory of all assets and accounts, including your home and other real estate, cars, bank and investment accounts, etc. Have you reviewed the titling of the assets and accounts to ensure there’s a plan in place in case something happens to you? If you’re married, are you listed as a joint owner or co-trustee? Do you know how to access those accounts? If not, what’s your plan for gaining access?
Consider putting together a list of accounts, and make sure you know how to access them. It’s also important to maintain contact information for any financial professionals, such as your wealth manager, accountant and estate planning attorney.
#3 – Protect your heirs.
One of the best ways to protect your heirs is by having the necessary estate planning documents in place, including the following.
- Will–A will is the main estate planning document everyone should have in place. Not only does a will distribute assets according to your wishes but it can also help minimize estate taxes and legal challenges to your estate.
- Revocable living trust– Establishing a trust can be an effective way to saved your loved ones from the hassle of probate, which is typically an expensive and time-consuming process. A trust can also provide significant tax savings and privacy for your heirs.
- Durable power of attorney–A durable power of attorney is a legal document that designates an individual to act on your behalf should you become incapacitated and unable to make decisions on your own.
- Healthcare power of attorney –Similar to a durable power of attorney, a healthcare power of attorney designates an individual to make medical decisions on your behalf should you become incapacitated and unable to make them on your own.
- Guardianship designations – If you have minor children, it’s vital that you formally designate who will care for them should something happen to you. This designation is often included in a will, but it’s important enough to call out separately. If you don’t make a formal designation, a court may give custody to someone you wouldn’t have chosen.
- Letter of intent –While not a legally binding document, a letter of intent can be used to inform your executor, your beneficiary or the court of your intentions following your death. You can also use a letter of intent to specify your funeral wishes or designate how a special asset should be handled.
#4 – Update your beneficiaries.
Many people don’t realize that beneficiary designations take precedence over wills. That means, even if your will was recently updated and your account beneficiaries are decades old, assets in beneficiary-designated accounts will be distributed to the named beneficiary. This can cause problems if the beneficiary is an ex-spouse or estranged family member.
The challenge with beneficiary designations is that you typically make them when you first establish a new account, such as an IRA or 401(k). Once that account is up and running, it’s easy to forget about these designations. However, it’s absolutely vital to review your beneficiaries on a regular basis to ensure they continue to be the correct heirs to your assets.
#5 – Regularly review your estate plan.
One of the biggest estate planning mistakes many women make is taking a “set-it-and-forget-it” approach. Your life and financial situation are constantly evolving, and your estate plan should continually evolve to keep up with your changing needs and wishes. Take time to review and update your plan on a regular basis. Also, be sure to take a look at your beneficiary designations any time you experience a major life event, such as getting married, getting divorced, having a child, losing a spouse, etc.
Could you use some help getting started with estate planning? Creative Planning is here for you. Our affiliate, Creative Planning Legal, is one of the largest estate planning law firms in the country, with attorneys licensed to practice in a variety of states. And we have many female wealth managers who work with clients who face similar challenges and stand ready to help you navigate them. Regardless of your specific situation, we can help prepare a custom estate plan to meet your needs. For help with your estate planning, or with any other financial matter, schedule a call with a member of our team.
