Estate Planning For Women
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- by Susan |
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Over my years of practice, I’ve seen an increase in the number of women looking to create an estate plan.
Estate planning is important for women because they have a greater likelihood of ending up alone later in life. Women have a longer life expectancy than men and tend to marry older men often making them the final word on disposition of family assets.
In my own case, I had the good fortune to convince my wife Patricia to marry me, despite the fact that I am six years older. As a bonus for me, she loves to cook and bought me my first order of “Grecian Formula” which “restores lost color to graying hair naturally.”
Deborah Jacobs, writing for Forbes Magazine, suggests that women ask themselves a few important questions to help them craft their best estate plan, inclusive of powers of attorney, guardianship, life insurance, wills, and trusts.
1. Whom can you trust? You should have a durable power of attorney giving a trusted family member or close friend the legal authority to make decisions for you should you become incapacitated due to mental illness, medical emergency, or accident.
2. Who would raise your children? It’s often the hardest question to ask because the thought of orphaning your children is so painful. But not asking the hard questions can leave your children at the mercy of the court. If you haven’t named a guardian, the court will need to name one. This can lead to a custody battle between relatives wanting to take the children, or, the reverse, no one may want to take them.
3. Do you have life insurance? Life insurance can help replace lost income when a spouse dies, or it may cover state or federal estate taxes. If you have life insurance through your employer or a pension plan, be sure to keep your beneficiary forms updated. You may want to designate a family member as the owner of the policy to avoid the proceeds being taxed as part of your estate.
4. Do you have assets of your own? The estate tax applies to each person individually. California is a community property state, so property that is used jointly in the marriage (e.g., the marital home or a joint bank account) is presumed to be community property. If you are trying to balance the tax burden, you may need to transfer title to one spouse individually. Otherwise, you may be rebutting the community property presumption in court.
5. Is there money in the bank? If your spouse dies, you will not have access right away to his individual bank accounts. You want to be sure that there is enough money in joint accounts or separate accounts to which you have access to cover immediate expenses until the spouse’s estate is settled.
6. Should you shed assets to save taxes? Before you start giving away the farm, you need to make sure you have enough money for yourself to live and pay emergency or final expenses. You can give away as much as $13,000 individually per year tax free, $1 million over your lifetime. This year is an anomaly in estate taxation (0% on estates, 35% on gifts), but starting Jan. 1, 2011, unless Congress acts, you will be paying the death tax and the gift tax at a rate of 55%.
There are a great number of estate planning and financial planning vehicles you can employ to transfer assets prior to and after death and to lower your tax bill. Take stock of your goals and your financial reality, and then talk to your estate planning attorney.