The fact that, as a woman, you are likely to live longer and have lower lifetime earnings than men makes you especially vulnerable in retirement. Consequently, it is especially important that you understand and undertake estate planning to secure a comfortable standard of living.
So, what should women know?
Living longer than men. Women can expect to live 4.8 years longer than men, according to an October 2012 report from the federal government’s National Center for Health Statistics). Moreover, the gap in years between the death of the male spouse and the surviving female spouse may be even greater than 4.8 years as a practical matter. How? Women tend to marry males older than they are, which further lengthens the number of years that women may be widowed.
Lower lifetime earnings. Working women earned only 81.2 cents for each dollar earned by a man in 2010, according to a March 2011 report on working women from the U.S. Bureau of Labor Statistics. Lifetime earnings for women also tend to be lower because women are more likely than men to have stayed at home for a period to raise children or care for elderly parents. Or, perhaps the couple emphasized the male’s career potential over that of the female in deciding to move the family to another city that benefitted the male’s career, but disrupted the woman’s career trajectory.
Longer lives increase odds of dementia. Approximately two-thirds of Americans over age 65 with Alzheimer’s (the most common type of dementia) are women, according to the Alzheimer Association’s report “2012 Alzheimer’s Disease Facts and Figures”. It’s not that women are more susceptible to dementia, but rather that women are living longer than men, concludes the report.
9 Ideas for Women
So what are women to do? Below are 9 ideas.
All Women – Married, Divorced or Never-Married – Need a Health Care Directive. The health care directive allows your hand-picked agent to speak on your behalf regarding your physical needs when you can no longer speak for yourself. Otherwise, you may find yourself under the care of a guardian appointed by a Minnesota court, which costs money and involves court supervision.
All Women – Married, Divorced or Never-Married – Need a Durable Power of Attorney. A “Durable” Power of Attorney continues in effect after you’re incapacitated. The durable power of attorney enables you to select a family member, friend or other trusted person to act on your behalf when you need help handling your financial affairs. Otherwise, you may find yourself under the care of a conservator appointed by a Minnesota court – a more expensive and time-consuming alternative since a conservator’s actions are under court supervision.
A Revocable Living Trust merits consideration. You could also establish a Revocable Living Trust, and appoint yourself as trustee so that you maintain complete control over your trust while you are able to do so. Should you become incapacitated, your handpicked successor trustee could manage the trust, without court interference, based on the terms and provisions that you specified in the trust document.
Long-Term Care Insurance May be Important. You may have been the chief caregiver for your spouse, but after his death, who is left to care for you? Long-term care insurance may enable you to hire others to care for you when you need help.
A Savings Account and/or Life Insurance Can Provide Needed Cash. Particularly in situations where your largest assets are not easily liquidated, a source of ready cash to pay for basic necessities after your spouse dies may be unavailable if you don’t have sufficient income of your own. A savings account or insurance on your spouse’s life could help in this situation.
Retitle Assets, if Necessary, so that Both You and Your Husband Have Similar Dollar Values of Assets. The Minnesota exemption from estate taxes is $1 million per person. Therefore, if an estate plan is properly structured (and the way to do so is beyond the scope of this blog) a Minnesota couple can claim a total of $2 million in state estate tax exemptions. But if $1.5 million in assets is in the husband’s name and only $500,000 is in the wife’s name, the couple at best will only be able to capture the $1 million exemption for the husband and $500,000 for the wife – a waste of $500,000 of the exemption. If each had title to $1 million, potentially the full $2 million exemption could be used.
Remember that the Surviving Spouse Typically Gets the Last Word as to What Happens with the Marital Assets after Both of You are Dead. That may not be okay with you if you are in a second marriage and you want to protect assets that you accumulated during your first marriage for your children from your first marriage. Talk to an estate planning attorney about the ways of providing this protection while providing some support for your new husband. Even if you are in a first marriage, there may be a charity or organization that you passionately wish to support at your death, and your surviving spouse may not feel the same way. To ensure that your wishes are followed, you can set up a specific gift in your Will or Trust that is distributed before the remainder of your assets are distributed to your husband.
If You Own a Business, You Need to Plan for What Happens After You Die. You’ll need a succession plan, or at least a plan for operating the business until a buyer can be found. If the business is to be closed down without a sale, you’ll need a plan for how existing customers or clients are to be notified and how uncompleted projects are to be wrapped up.
Consider the Family Heirlooms. Whether they are of monetary or only sentimental value, you need a Will or Trust to ensure that your family keepsakes are passed on to those persons that you want to have them.
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