Women outlive men, make less during their careers and have less in savings due to pay discrepancies and time taken out of the workforce to raise their families. These are just a few reasons why it is important for you to know the following about estate planning:
Minor children can be legally protected with a Kids Protection Plan®, which provides parents with important legal tools to name short- and long-term guardians, provide instructions and guidelines for those guardians and execute medical powers of attorney that allow you to dictate medical care for your minor children in case they are injured and you are not with them.
A Will and a Living Trust are both essential estate planning tools, and although both can be used to transfer assets upon death, they serve separate purposes. A living trust can take effect while you are alive or after death. It allows you to hold assets for your benefit during your life, which may prove useful if you become incapacitated in the future. A living will can also be beneficial if you own real estate in another state. A Will only takes effect upon death, and is used to appoint guardians for minor children, cover assets that are not part of a living trust and create trusts that kick in after death.
Women need to execute financial and healthcare durable powers of attorney and consider choosing a member of the family if that person is willing to assume the responsibility of making financial and/or medical decisions on your behalf in case of incapacity. And, if you are married or partnered, make sure your spouse or partner does the same because you’ll be the one who is handling things if anything happens to your spouse/partner and you want it to be as easy as possible.
Make sure your partner/spouse has life insurance to support you for as long as you will need support and that there’s enough to last your whole lifetime, unless you will have your own savings.
Don’t own your own life insurance policy as the proceeds will be subject to estate tax after you die. Instead, if your life insurance is designed to pay estate taxes, designate a spouse or other family member as owner or set up an irrevocable life insurance trust (ILIT), which buys the policy and holds the proceeds for beneficiaries. And again, if you have a taxable estate, make sure the same is set up for your spouse’s life insurance.
Keep beneficiary forms for retirement accounts (IRAs, 401(k)s, etc. ) up to date, as they determine who receives the assets of each one of your accounts. Make sure there is enough cash held in a joint account to handle any immediate expenses if your spouse dies suddenly. You may not be able to access a deceased spouse’s separate bank account right away. Surviving spouses are allowed to add the unused portion of a deceased spouse’s estate tax exclusion to their own– which means the surviving spouse can have an estate tax exclusion of up to $10.98 million in 2017. However, this exclusion transfer must be claimed by the deceased spouse’s executor filing an estate tax return. There’s other critical items that must happen when your spouse dies that can easily be overlooked. Contact an attorney within a few weeks of your spouse’s death whether you have a sizable estate or not. Married couples can participate in gift splitting during life, which means they can share each other’s $5.49 million lifetime gift exclusion and can each make gifts each year and give more to their children now tax-free. We recommend you transfer as much as possible during life for many reasons. Ask us about it.
The best way to learn about protecting yourself and your family is to talk with Pierchoski Estate Law at 931.363.7222 about a Family Wealth Planning Session, where we can identify the best strategies for you to provide for and protect the financial security of your loved ones.