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6 estate planning tips for women

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The annual U.S. Trust Insights on Wealth and Worth survey, which was released last week, points out how the estate planning landscape has evolved, particularly in response to the demographic changes that have transformed our nation. One of the most important trends, one that shows no sign of abating, is the increasing importance of women in forming estate plans.

There is no doubt that the economic power of women is growing. According to U.S. Trust, “more than half (52 percent) of women came into their marriage or relationship with financial assets equal to or greater than their spouse or partner, and one-third (33 percent) of women are now the primary income earner or contribute equally to household wealth.” One estimate shows women controlling $14 trillion in assets right now, a figure that is expected to grow to $20 trillion by 2020. 

That’s a lot of assets that will need to be shielded and passed on to the appropriate parties. But that doesn’t mean that estate planners can simply assume that the same strategies are applicable for women as for traditional male-dominated households.

To take one simple, inescapable fact, women live, on average, six years longer than men; that creates several key differences in end-of-life planning issues.

Estate planners dealing with women who bring the own wealth to the table may want to keep the following issues in mind:

Long-term care insurance

1. Durable power of attorney and LTCI

Since women live longer than men, they should expect an increased likelihood of the kind of physical and mental incapacity that often occurs toward the end of one’s life. Given the demographic realities, wives can’t expect to depend on their husbands to be there for them at that point in their life. Without a durable power of attorney for assets and a durable power of attorney for health care, women are at greater risk than men for having a court-appointed figure take control of their assets. Women are also more likely than men to need long-term care insurance at the end of their life.


2. Assets

Women, especially recent widows, may want to consider creating a revocable living trust for their assets, which can provide better protection than a durable power of attorney alone in case of incapacity. Since it can also contains instructions for distributing the client’s assets when she dies, it may be a good solution for someone who wants to simplify her estate plans.

caring for older people

3. Caring for elderly parents or family 

There’s another factor that comes into play simply because women tend to live longer: They are more likely to have to assume the task of caring for elderly parents, or other disabled family members. A woman’s estate plan should include plans and assets for taking care of loved ones that have fallen under her responsibility.

Last will and testament

4. Create an estate plan

Women who are widowed often react as if that is the point at which their husband’s estate plan kicks in for them. But that may be the time for them to create an estate plan of their own, especially if they brought their own assets to the marriage. Or to revise the existing estate plan for the couple, in order to reflect the new realities.


5. Revise the estate plan for a second marriage

Women who are embarking on a second marriage later in life should also revise their estate plan, or create one if one hadn’t already existed. Another important caveat for remarriage: Any assets that women bring to the marriage are available to pay for the new spouse’s medical bills, including long-term and nursing-home care. Even a prenuptial agreement doesn’t exclude those assets from being used to pay for spousal health care. Some planners recommend that a woman with substantial assets buy a long-term-care policy for their husband.


6. Make long-term changes to financial planning

Divorce can also create important changes in women’s long-term financial planning. Clients should be very careful about what does and doesn’t remain in their name following a divorce. This can affect not just current assets, but future ones as well, such as retirement account and pension plans. 

See also:

Essential skills for advising women

Which life insurance policy is right for your client?

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