Women generally live longer than men and are increasingly finding themselves divorced, never married, or widowed, and these circumstances further make estate planning for women a must.
Having an estate plan in place can give you the peace of mind that your loved ones will be taken care of, that your assets will be in good hands, or that your favorite charitable causes will benefit once you're gone. Moreover, a solid estate plan can help you provide for the day when you may become incapacitated.
Because everyone's circumstances are different, there is no one estate planning checklist that everyone must follow. But there are some major issues to consider.
Last Will and Testament
A last will and testament is a fundamental estate planning document that everyone should have. With a properly executed will, you can be sure that you are in charge of distributing your assets after your death. If you are married, keep in mind that you may eventually be responsible for the ultimate distribution of the marital assets if your spouse dies before you. It is crucial, then, that you coordinate your will with your spouse's will so that your estate plan can most effectively achieve your goals as a couple.
With a will, you can name the executor who will be in charge of distributing your estate. If you have minor children, you can also name a guardian for your children in your will. Accordingly, if you have young children or children with special needs, a will is a necessity.
Living Trusts and Irrevocable Trusts
A living trust is a legal document that holds assets for your benefit while you're alive and are then distributed to your chosen beneficiaries at your death. You can change the terms of the trust or revoke it entirely within your lifetime. An irrevocable trust, on the other hand, cannot be changed or revoked. There are several different types of trusts that may be advisable for either married or unmarried women, depending on the circumstances.
Marital trusts, such as AB trusts, are joint trusts designed to take full advantage of the federal estate tax marital exemption. The federal estate tax levies taxes on estates valued over a certain amount, which varies by year. The marital exemption doubles that threshold amount. Unmarried women should pay special attention to the potential for federal estate taxes because they will not have access to the marital exemption.
A charitable remainder trust is one example of an irrevocable trust that may be attractive to an unmarried woman as it may help avoid estate taxes. Charitable remainder trusts are set up so that the trust benefits an individual for a set period of time, and then the remainder goes to the charity of the trust creator's choice.
Living Will and Powers of Attorney
A living will is a type of advance directive that allows you to list the medical treatments you would want or not want under certain conditions. A health care proxy is another type of advance directive through which you can name someone to make medical decisions on your behalf should you become incapacitated.
Powers of attorney are another consideration, which should be part of any woman's estate plan, married or unmarried. A durable power of attorney can handle all of your affairs should you become unable to do so, while a health care power of attorney has control over health matters only.
While estate planning issues vary slightly depending on marital status as well as whether or not you have children, for the most part, the goals are the same: making sure you are the one directing where they will go once you've passed away while also preparing your affairs if you become incapacitated.
And the best time to start estate planning is always now.