There was a time when the words women and estate planning was never mentioned in the same sentence. This dynamic has shifted substantially in the past five decades. What wasn’t as quick to catch up with the times, was the number of men who opted to name someone other than their wives as financial powers of attorney. For that matter, they didn’t name their wives in a medical power of attorney, either. It was not about insulting their wives, but rather, it was just the way things occurred.
Wives and their delicate psyches weren’t supposed to worry about such unpleasantries as finances and medical care. These days, of course, there are very few remnants of that mindset and in fact, women today have very different needs and preferred outcomes when it comes to their own estate planning.
That’s not to say estate planning is more important for women. However, women historically outlive their male counterparts and when they marry, it’s often to older men. This explains the fact that they’re three times more likely to be a widow at the young age of 65. It also means estate planning takes on new meaning for women. Women are often the ones making the final decisions associated with their collective assets as well as any assets her husband may have left to her. For example, a woman’s husband may not have supported charitable giving, but she may have different ideas and opts to leave something for a charity. These dynamics are complex, to say the least.
Another consideration for women, is the reality that she may not have the option of seeing her husband step into the role of decision maker in matters such as her medical decisions. Women are more likely to become their husband’s power of attorney. Because women live longer, they have to consider the possibility of having an adult child, other family members or even a close friend serve in that role should she ever become incapacitated. Along with her medical power of attorney, she has to consider a financial durable power of attorney.
Women are also faced with a task their deceased spouse might not have had to deal with, or at least not to the extent that she will endure. Any surviving spouse will have to put into place safeguards for assets that could be at risk. Trusts can accomplish this. They allow for the surviving spouse to protect money for any minor children and in many instances, can protect the assets from creditors and prevent funds from being eroded in ugly divorce battles that an heir may face.
While all of this sounds less than ideal, there are a few tax breaks available. Inherited assets or gifts from a spouse are not taxed. Referred to as the “unlimited marital deduction”, Congress put into place rules that allow a surviving spouse to add any unused estate tax exclusion of the deceased spouse to her own $5 million exclusion. Courtesy of this portability, a widow may then pass on up to $10 million that’s not taxed, provided it’s in the form of a lifetime gift or if it’s passed through her will.
This is just a brief rundown of how these types of situations typically play out. Every client’s needs are different and if you’re wondering how it all works in your specific family dynamics, we invite you to contact our office today for a complimentary consultation. We’ll answer questions and make recommendations that can help put your mind at ease.