Having a well thought out estate plan in place protects you, your loved ones, and your assets. Although most people are aware of that, a surprising number of them do not have a plan in place. Women are disproportionately represented in that group. If you are among them, now is the time to finally sit down and get started on your estate plan. While many estate planning issues are the same for men and women, there are some estate planning concerns that are unique to women. With that in mind, the estate planning attorneys at Collins Law Group have put together the following “Guide to Estate Planning for Women.”
Getting Started — Motivation
Although estate planning is important to both men and women, estate planning issues often affect women more profoundly. Why? It comes down to life expectancy. Women have a longer life expectancy, on average, than their male counterparts. When you factor in the tendency for a woman to marry a man who is slighter older than her, you end up with a woman being three times more likely to be widowed at age 65. This means that as a woman, you will probably have the final say when it comes to spending and/or transferring the family wealth. It also means that related estate planning issues, such as retirement planning and incapacity planning, take on a heightened importance.
Making the Most of Your Will
When you think about your Last Will and Testament you probably focus on decisions related to the distribution of your estate after your death. While the division of your estate can be accomplished using your Will, that may not be the most important aspect of creating a Will for a woman. What you may not know, is that your Will offers you the only opportunity you will have to name a Guardian for your minor children in the event one is ever needed. If it becomes necessary to appoint a Guardian, a judge will make the decision who to appoint; however, if you have nominated someone in your Will, and the individual appears competent and willing to accept the position, a judge will almost always honor your wishes.
What Happens When the Caregiver Needs Care?
Arguments over equality aside, the reality is that women tend to be the caregivers. Women are more likely to be the primary caregiver for minor children, aging parents, and even the family pets. What happens though, if something happens to the family caregiver? Your own incapacity could have a direct impact on everyone you care for, which is why you need to plan for the possibility. You need to plan for this possibility in your estate plan. There are several different ways you can accomplish this. Hopefully, you already named a Guardian for your minor children in your Will. If you have a child with special needs, additional estate planning is necessary to ensure your child is provided for if something happens to you. A special needs trust can be set up to provide supplemental funding for your child without jeopardizing your child’s eligibility for state and federal assistance programs, such as Medicaid and SSI. You can also set up a pet trust to care for your family pets if the need arises. Finally, you may need to petition for guardianship of an aging parent. If so, make sure you name a successor Guardian in the event that you are unable to act as your parent’s Guardian because of your own incapacity.
Honoring Your End of Life Wishes
Statistically speaking, you are likely to outlive your husband. If that happens, you will not have a spouse around to make healthcare decisions for you nor to plan your funeral and burial. As difficult as it may be, you need to plan for these things yourself. Executing an advanced directive will allow you to appoint someone of your choosing to make healthcare decisions for you if you are unable to make them yourself at some point in the future. You can also make end of life medical decisions now, such as whether you wish to authorize or refuse the use of life sustaining equipment. Funeral and burial planning also lets you decide ahead of time how your body will be handled after your death and what type of funeral service you wish to have. You may also choose to fund your own funeral and burial ahead of time using a funeral trust so that loved ones do not have to scramble to gather the funds necessary for your service.
Understanding the Gift and Estate Tax Laws
Although everyone should understand how the federal gift and estate tax laws may impact their estate, it is even more important for women to know where they stand because they are likely to be the last one standing. Federal gift and estate taxes, at a rate of 40 percent, are potentially levied on the estate of every taxpayer at the time of death. Fortunately, the lifetime exemption may also be used by every taxpayer. The lifetime exemption was set at $5 million back in 2012, but is adjusted annually for inflation. For 2017, the limit is $5.49 million. This means that an estate is exempt from the tax up to $5.49 million in combined lifetime gifts and estate assets owned at the time of death. The marital deduction, however, is why many surviving spouses end up in trouble. If you husband has a moderate to large estate, and failed to plan ahead, his estate may have used the unlimited marital deduction to transfer all estate assets to you without incurring any federal gift and estate tax obligation. If, however, that transfer of wealth put your estate over the lifetime exemption limit, your federal estate tax debt has only been deferred until your death. It will be up to you, as the surviving spouse, to incorporate tax avoidance strategies into your estate plan to avoid losing a significant percentage of your estate to taxes when you die.
If you have additional questions or concerns relating to estate planning or you wish to get started on your plan, contact the experienced California estate planning attorneys at Collins Law Group by calling (310) 677-9787 to register for one of our FREE Estate Planning Workshops.