At some point in life, every woman will have to consider the family’s estate planning documents. Whether through a divorce, a death in the family, or a decision to not get married, leaning on someone else to think through the estate plan is simply not an option for many of our clients. And even for those who are happily married and who could delegate these decisions to their significant other, having some level of understanding in the area can be tremendously useful.

So, what is an estate plan?

An estate plan is a set of documents that spells out your wishes for medical care, decision making, and how your assets will be distributed after death. Not having your estate plan in place can make these issues complicated. From putting your loved ones in a position to guess at your wishes and preferences, to managing probate and taxes, incomplete or missing estate planning documents can make an already difficult time even harder.

Here’s what every woman needs to know about creating an estate plan.

Why Do I Need an Estate Plan?

One of the biggest misconceptions of estate plans is that they are only for the wealthy.

However, the truth is that everyone has an “estate,” even those with a modest amount of possessions. If you own anything at all, and if there is a slightest chance that someone will have to make medical or financial decisions on your behalf, then you need a plan. Spoiler alert: that just described every single American. At SYM Financial, we believe that everyone could benefit from taking the time to create the proper estate documents — regardless of net worth.

For example, think about a scenario in which you pass away suddenly.

Who would inherit your money or retirement savings?

What would become of your home, vehicle, and other possessions?

If you have minor children, who would take care of them — and how would they be provided for?

If you have pets, who would continue to look after them?

Most people assume that their things will go directly to their children or other relatives, or that a close friend or a neighbor will happily adopt Fluffy or Fido on short notice. Unfortunately, those assumptions are dangerous. Without proper documentation in place, the courts will have to decide who gets what. This can become particularly troublesome for people who have remarried or entered into a blended family. Descendants not related to you by blood may have a difficult time laying claim to your assets — unless you officially name them as one of your beneficiaries.

A well-designed estate plan ensures that there is a plan for each of these items. Every belonging would go to the person you want to have it (instead of someone else that you didn’t intend). Your pets would go to someone who loves animals and who is well-positioned to look after them. Additionally, estate planning professionals can help you do this in a way that can potentially minimize the tax liability for your estate and for those inheriting your assets.

What Basic Estate Documents Do I Need?

There are several fundamental documents to consider for your estate plan:

  • A Will. This is a legal document that coordinates the distribution of your assets after death. It will be used in the court proceedings (called probate) that settle your estate. It’s important to understand that while a will covers many assets, it may not cover everything. Life insurance and annuity contracts, along with retirement accounts, are often paid directly to the named beneficiaries. It is important to understand which assets are covered by a will and which ones are not.
  • A durable Power of Attorney. This document allows someone else to sign a legal document on your behalf. That can be helpful (and even critical) if you become incapacitated, whether temporarily or permanently. For instance, if you were to have a medical emergency while traveling, you might need someone back home to sign papers or handle your affairs while you’re not able to do so yourself.
  • A healthcare Power of Attorney. This is a document that gives someone else the power to make all of your health care decisions for you. Like a durable Power of Attorney, this is helpful if you become injured or develop dementia and cannot make sound decisions.
  • A healthcare directive or living will. This is a document that expresses your wishes for life-saving procedures. Examples might be whether or not you’d want to be resuscitated or have a feeding tube. Your healthcare power of attorney should use your healthcare directive to understand your wishes for potential end-of-life treatment.

What Other Estate Documents Might I Need?

In many cases, a trust can help add some structure to your overall estate plan. Unlike a Will, which can be challenged in court and becomes public record, trusts are private. Trusts can also allow you to hold assets outside of an estate.

There are many different types of trusts, each with its own advantages. One that’s used commonly in estate planning is a revocable living trust. This is a trust that lets you retain full control over your assets during life, yet takes ownership of these things in death, allowing them to be dispersed to your intended beneficiaries without involvement from the courts.

Trusts can also be useful for making sure your minor or special needs children are provided for if you’re not around. The assets can be held in the trust until they are adults, or a procedure can be put into place to make disbursements for their living expenses.

Finally, trusts can also be helpful for tax planning and preserving family wealth. Irrevocable Life Insurance Trusts are one popular choice to help keep life insurance death benefits from being counted as part of the value of the estate.

How Is Estate Planning Different for Women?

No one likes to think about their own mortality, and this can be especially true for many women. According to the Journal of Cognitive Psychotherapy, women tend to be more afraid of death than men. This, combined with the dozens of other responsibilities women often take on, makes it difficult to get around to the creation or maintenance of estate documents.

Another factor to consider is if a woman has been single her whole life (or if she suddenly becomes single following a divorce or the death of her spouse). Trying to prepare these types of documents can cause uncertainty and anxiety. It can also be a struggle to decide what is fair versus equal when assigning beneficiaries.

Who Can Help?

At SYM Financial, we do not recommend that clients do estate planning on their own. Experienced professionals can help you avoid mistakes.

  • An estate attorney is not just invaluable but also necessary. They’ll help you properly draft each of these documents. They can also advise you on which type of trust to set up.
  • A financial advisor can work in tandem with the estate attorney to review your assets and beneficiary designations. They can also suggest ways to reduce the overall tax burden on your beneficiaries.

It’s vital that these two professionals work together on your behalf and don’t override each other’s efforts. A lack of cooperation or communication could potentially result in conflicting instructions — which could lead to unnecessary complications later.

So, work with your estate attorney and financial advisor to review and update the documents. And if you are curious about the role that trusts could play in your estate planning, you are invited to attend our next Women’s Initiative event on October 21, 2021 at 6:00 pm in Fort Wayne. Attendance is free but seating is limited, so please register using this link. 

Disclosure: The opinions expressed herein are those of SYM Financial Corporation (“SYM”) and are subject to change without notice. This material is not financial advice or an offer to sell any product. SYM reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. Information was obtained from third party sources which we believe to be reliable but are not guaranteed as to their accuracy or completeness. SYM is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about SYM including our investment strategies, fees, and objectives can be found in our ADV Part 2, which is available upon request.