Creating a comprehensive estate plan is vital for everyone, without regard to the size or value of your estate. Although woman tend to be less likely to be involved in estate planning, there are reasons why having a plan in place is actually more important for women. At the top of the list of those reasons is the strong likelihood that a woman will outlive her husband by several years. Without a well thought out estate plan in place, this can cause financial havoc at best and financial devastation at worst. If you are a woman, gaining a better understanding of why estate planning for women is so important will hopefully prompt you to get started on your plan.
Traditional Estate Planning for Couples
Although this begun to change in recent years, traditional estate planning dictated that a couple would create their estate plans as a couple. More importantly, it was typically the husband who oversaw the estate planning process and made important estate planning decisions. For those in the Baby Boomer generation who are just now reaching retirement age, this traditional approach to estate planning likely still applies. While there is certainly nothing wrong with allowing your husband to oversee the creation of your plans, failing to understand the terms and provisions of your plans could be detrimental to you as a woman. More importantly, failing to account for the likelihood that you will outlive your spouse could have disastrous results for you from a financial perspective.
Will You Survive Your Spouse?
One of the most important reasons that estate planning is even more important for women is the strong possibility that you will outlive your spouse. Over the last century, the overall life expectancy of the average American almost doubled. According to the Center for Disease Control and Prevention (CDC), the life expectancy of the average American was 78.8 years as of 2012, the latest year for which statistics are available. When broken down by gender, however, there is a disparity of almost five years with the average life expectancy of a female coming in at 81.2 years and her male counterpart at 76.4 years. Add to that the fact that the average groom is two to three years older than the average bride and the problem becomes clear. If you are a woman, there is a very good chance you could outlive your spouse by five to ten years.
What Needs to Be Covered in Estate Planning for Women?
Of course, no one knows with certainty that you will outlive your spouse; however, planning for that possibility only makes sense given the statistical likelihood. With that possibility in mind, what estate planning issues do you need to focus on? Although estate planning is highly individual, some common questions women need to think about when estate planning include:
- Do you have your own plan? Once upon a time, it was common for a couple to have one estate plan that distributed assets to the wife and children upon the death of the husband. That approach is no longer practical for several reasons. For one thing, woman now contribute equally to the accumulation of assets in a marriage. Furthermore, given that a woman is likely to live longer it becomes important that she have a separate plan that considers that possibility of her husband pre-deceasing her. Of course, your plans can complement each other and work in harmony with one another; however, you should have your own plan.
- How are assets titled? As a married couple, you like own a number of assets jointly. The way in which those assets are jointly titled will be extremely important if one of you dies. Assets titled jointly with rights of survivorship, for example, will pass directly to the co-owner upon death whereas other types of jointly titled assets become part of a decedent’s estate.
- Do your estates include sufficient liquid assets? It doesn’t matter how valuable your husband’s estate is if it lacks liquid assets because you will need to continue paying the bills even after losing your husband.
- How will you pay for long-term care? Long-term care costs can diminish a couple’s nest egg rapidly if you failed to plan ahead. You do not want to find yourself in a situation where your husband’s LTC costs drained your savings, leaving you without sufficient assets to live comfortably. Including Medicaid planning in both of your estate plans is the solution to this potential problem.
- Will you incur gift and estate taxes? Make sure you understand how federal gift and estate taxes are calculated and how they might impact both your estates. Again, you don’t want to find yourself lacking in assets to support yourself following your spouse’s death simply because no one took into account the impact taxes would have on his estate.
For more information, please join us for one of our upcoming free seminars. If you have additional questions or concerns about estate planning for women, contact the experienced Los Angeles estate planning attorneys at Collins Law Firm by calling (310) 677-9787 to schedule an appointment.