WHAT WOMEN NEED TO CONSIDER DURING THE ESTATE PLANNING PROCESS
Estate planning is critical for every person, but women in particular face challenges that make preparation essential to avoid hardship in later years. At slnlaw, we are fully conscious that estate planning is an issue affects both men and women, but we also know that the statistics emphasize the importance for women specifically to exercise this task.
Women Are Likely to Outlive Male Spouses
The average life expectancy for women in the U.S. is 80.1 years. For men, it’s 73.4 years. Also, women are more likely to marry older spouses, only increasing the chances that they will be the surviving spouse. This means both retirement and estate planning is more likely to have a direct effect on a woman’s later years.
It’s important to plan in advance, well before retirement. Here’s an example of why: if the woman’s spouse has a pension, they may be able to choose if they should take the higher payments or allow the pension to continue for their wife after they die. The couple should decide together which option to choose so both parties can understand how it will affect both their retirement income and the surviving spouse’s benefits after the pensioner dies.
Also, paying attention to estate planning while both spouses are alive can be a lifeline to the surviving spouse (again, most often the woman) in terms of avoiding a large estate tax hit in the aftermath of a spouse's demise. Specifically, due to allowances like the unlimited marital deduction, there are tax saving strategies women can utilize to reduce estate taxes on their spouse’s assets after they pass on by essentially pooling both spouse's $1 million exemption. This can mean the difference between liquidating hard assets to pay the state and maintaining a home and financial security in the transition. Though it can be a sensitive issue to discuss while both spouses are alive, every scenario should be considered in an estate planning session with an attorney.
Women Do Not Earn as Much
Over the course of a lifetime, women do not earn as much as men. According to research conducted by the National Women’s Law Center, women in the U.S. lose $403,440 over the course of a 40-year career, and this figure is not adjusted for inflation. The effect accumulates over a lifetime, and can substantially reduce a woman’s ability to take care of herself through retirement, particularly coupled with the loss of income if the woman outlives her spouse. There are state and federal equal pay laws that try to mitigate these issues, but in planning for the future it is important to remember that the wage gap does exist, and can seriously affect a woman's financial security if she outlives her husband by many years.
There are additional statistics that contribute to a woman’s critical responsibility to plan for herself and her loved ones. For example, five out of six women gain sole custody of children in a divorce. Child support notwithstanding, both divorce itself and the primary responsibility for children can add additional strain to the financial picture.
While laws continue to be enacted to remove the wage gap, the fact remains: retirement and estate planning is an essential action to take for women who plan to independently rely on themselves for income in their later years.
Why an Estate Plan Is Essential
A woman’s estate plan plays an important role in her well-being. In addition to the very real issues surrounding income and protecting family assets from estate taxes, if she is widowed, there are other considerations as well. For example, she may not automatically have a healthcare proxy or a durable power of attorney, so creating or updating these documents after a spouse dies can relieve confusion and indecision amongst family members.
If a woman outlives their spouse, she is also the one solely responsible for how assets are distributed in the family- mostly likely the deceased spouse will have left all or most of their assets to the wife, who then has to be the final say in how those assets are distributed when she is gone. She is also the one solely responsible for planning for the possibility of her own serious illness or incapacity, without a spouse to take care of the home and other affairs if she needs nursing home or long term care.
An estate planning session with an expert in the field can reveal ways to avoid taxes and ensure the recipients receive the maximum benefit after their death. It can also help you understand how to strike a balance between the assets you need to keep liquid in order to support yourself and strategies like irrevocable trusts to preserve assets for your children should you need to enter a nursing home in the future, or need to move assets out of your own estate for tax planning purposes.
What You Need
No matter what, estate planning is different for everyone because no one situation is the same. What matters it that your specific needs are met with a comprehensive, tailored approach, and that’s what we offer here at slnlaw. Contact us today to set up a free consultation and let’s examine your current estate plan together, or let’s build one that puts your wishes and your loved ones first.