This post paraphrases the excellent article on Forbes.com by Deborah L. Jacobs, “Six Estate Planning Questions For Women” with a sharper focus on younger women. (See also, In Pictures: Nine Things Women Should Know About Estate Planning)
Estate planning is often more important for women. The primary reasons are that we tend to:
- marry older men,
- earn less money than them during our lifetimes (due to the persistent pay gap and time off from paid labor to care for young children), and
- outlive our husbands.
The upside of all this is that we also tend to have the final say. If we’re the last one standing, we tend to be able to decide who gets what, how, and when after we’re gone.
But we also have some really important things to consider for ourselves while we’re still living that are also critically important pieces of the estate planning puzzle.
- Make sure you have legally named guardians for your minor children. That becomes even more urgently important if we’re the only surviving parent, or we’re single or divorced, or if there is any other possible reason why there might be a custody battle over our children should something ever happen to us.
- Make sure you are covered by enough life insurance. For most young families in particular, most of our largest assets (such as our homes and retirement accounts) are illiquid, meaning we can’t easily cash out and pay for necessities. If you’re a double-income family, you need to prepare for what you would do if you suddenly lost that other income forever by having sufficient life insurance to make up the difference. And SAHMs need to think about this in a different way. Too often I hear that the husband/father “is the one earning” by way of explaining why the wife/mother has no life insurance on her own life. How much would it cost to hire all the people it would take to do all of the jobs a SAHM does? How many times have you laughed at the list of all the jobs you really do and what the true value of all of that would be on the open market? Life insurance and estate planning go hand-in-hand (more on that soon), so make sure you talk it over with both your life insurance agent or financial planner and your estate planning attorney.
- Make sure you have named agents to assist with your financial affairs and health care decisions. Because we tend to live longer (and because our health risks during certain times in our lives such as pregnancy/labor and delivery are higher), our need to carefully choose and legally appoint the people we want to manage our day-to-day financial affairs (like making sure our basic bills are paid) and to make important medical decisions for us in the event of our incapacity are extra important.
- Make sure you understand why it is that how we own our assets (most commonly jointly with our spouses) may not always be the best plan for our family. If you don’t already, then ask your estate planning attorney to review your assets with you and explain your circumstances in detail. There are some very strong reasons to consider dividing up assets amongst spouses as tax-saving and asset protection strategies. But if that doesn’t feel right to you as a couple on an emotional level, a joint trust may be a preferred solution. Same-sex married couples, however, continue to have to consider their separate standing under Massachusetts and federal law.
- Make sure you have immediate access to cash. If you and your spouse have separate accounts (not jointly owned), unless your assets are held in trust, you will not have immediate access to them. Make sure you have at least enough for necessities and monthly bills you will have to pay immediately.
- Make sure you have enough to live on for your lifetime before you start giving it away or locking it down. As part of a strategy to save on estate taxes, parents will often begin gifting their assets away to their children and grandchildren. That’s great!…if the parents will still have enough to live on into a ripe old age. With medical advances as they are, people are living longer and longer and most prefer to remain at home, with help, as long as possible. So we first need to make sure we have enough to live comfortably and be cared for where and how we prefer.