Women have a variety of responsibilities that affect their financial planning needs. Estate planning can often be put on the backburner to cater for more immediate needs, but this could have serious financial consequences for you and your family further down the line. This International Women's Day, choose the right estate planning tools that meet your needs with Agemy.
What many American women don't realize is that in addition to investing, estate planning is a crucial component of retirement planning. The word estate alone can throw off many, but this misleading mindset can come back to bite you.
Whatever assets you possess (small or large), a well designed estate plan can ensure you can pass on your wealth and possessions to the ones you love most. Let’s take a look at some tips that can help take control of your estate planning.
Why Women Should Have an Estate Plan in Place
One of the financial planning areas that women often leave out, but need to particularly pay attention to, is estate planning. Estate planning is the legal planning that helps you control who will inherit your money and property, and who can make medical and financial decisions on your behalf if you’re unable to do so yourself. It's especially critical for women to take part in estate planning for the following reasons:
- Life expectancy: Women outlive men in almost every society. In more developed countries, the average life expectancy at birth is 79 years for women, 72 years for men. As such, estate planning is important to understand, and to actively participate in the decision making process, because there is a good chance women will be around for many years after their husbands pass away. Moreover, everyone benefits from having a well-crafted estate plan.
- Women are natural caregivers: Since women take on the majority of caretaking, having an estate plan in place will relieve loved ones of financial burdens when you pass and ensure that your loved ones are protected.
- Rising Wealth: More and more women are business owners and entrepreneurs. American Express estimates that there are nearly 13 million women-owned businesses in the U.S. that employ 9.4 million workers. With this additional responsibility and asset owning, it is vital that all women entrepreneurs and business owners integrate succession planning as a part of their estate plan.
Making Plans For Living Longer
Everyone who has assets should have an estate plan in place. An asset can be anything from inherited wealth, stocks, family heirlooms or even a car. As mentioned, American women are living longer, and this requires additional planning. Along with all the positive aspects of a longer life span comes the reality that there is a greater incidence of mental and physical decline in those later years.
Plan accordingly by having a Power of Attorney. It is perhaps the most basic tool to ensure that if you become disabled mentally or physically, your assets can be accessed and managed without court intervention. While these issues can be difficult to talk about, it's essential to have a plan in place.
The powers that you grant in a power of attorney are broad and are intended to permit the attorney-in-fact to step into your shoes. Without an estate plan, the court will designate a guardian to manage your financial assets and medical care.
Remember, like anything in life, nothing stays the same. Whatever the reason may be, you do not have to keep the same power of attorney you initially allocated in your plan.
Designate Your Beneficiaries
Designating beneficiaries to inherit your assets after you pass is important as it will enable the assets to be transferred smoothly. Proper estate planning should include assigning beneficiaries for all accounts.
Certain assets pass to heirs based on beneficiary designations. These are known as “will substitutes.” This means that the beneficiary designation overrides anything that might be in the client’s will regarding the distribution of the asset. A couple of examples of these assets would be:
- IRA accounts
- Workplace retirement accounts such as a 401(k)
- Life insurance policies
- Annuities
It's important that these beneficiary designations are current, especially after a major life change like getting divorced, getting married, or becoming widowed.
Revisit and Revise As Needed
Estate plans are not set in stone. Once you have your estate plan made, it is not something that you can forget about. As you approach your review process, you are looking to ensure that your intentions have not changed, that the right people are included, that major life changes are reflected, and that all other major changes are notated.
Effective estate management enables you to manage your affairs during your lifetime and control the distribution of your wealth after death. An effective estate strategy can spell out your healthcare wishes and ensure that they're carried out – even if you are unable to communicate. It can even designate someone to manage your financial affairs should you be unable to do so.
By regularly revisiting your estate plan with your trusted Fiduciary advisor, you can let them know of any life changes that could affect your plan and make appropriate adjustments. This can include anything from marriage, death of a spouse, relocating, and more.
Further Considerations
So, what else should you remember to include in your estate plan?
- Revocable Living Trust: The “central hub” of your Estate Plan. Allows you to preserve your estate for your loved ones and keep it out of probate court, avoiding delays in the execution of the Will and additional fees. Set up the management and distribution of your assets during life and after death with a Living Trust.
- Living Will: Specify what medical treatment you do and do not want administered if you cannot speak for yourself. Appoint a trusted family member or loved one to ensure that your health care wishes are respected.
- Last Will: Your final wishes and arrangements. Appoint an Executor of your Estate to ensure that your beneficiaries receive their inheritance. Name the legal guardians for any children you may have if you or their other parent cannot care for them.
- Schedule of Assets: An up-to-date listing of all your assets.
- Consider Your Estate Tax Obligations: Read up on the Internal Revenue Service's rules on estate taxes, the limits of which change yearly. If your estate approaches that number, you should consult your retirement income advisor/estate planner to get your bases covered. You should also be sure to find out whether your state has any death and inheritance taxes that might affect your estate—some states have a lower threshold amount than the federal government does.
Final Thoughts
Women deserve to have their assets protected. Agemy Financial Strategies can help make that happen.
International Women's Day is a great reminder for the importance of protecting yourself and your assets with an estate plan. When it comes to estate planning, having a retirement income advisor that you trust is crucial to your planning success.
At Agemy Financial Strategies, we have over 30 years of estate planning experience to guide you through the entire process of creating last wills and testaments, living trusts, powers of attorney, and living wills — all with the help of our trusted Fiduciary advisors.