We slog all our life to create wealth in order to leave a substantial legacy for our dependents and loved ones. Good estate planning effectively converts your ‘wealth’ into a ‘legacy’.
An estate is the net worth of a person at any point in time, alive or dead.
While estate planning is an important concept for everyone, regardless of the size of the estate, it assumes more importance for women. They are most affected by the absence or deficiency in estate planning of their spouses.
This is primarily because women, on average, live longer than men and must manage living expenses for a longer period of time. The average woman earns less and hence, is at a financial disadvantage. It’s never too late to organize your financial life and plan how you will pass on your wealth to your beneficiaries.
A different approach
Women are likely to be custodial parents and, generally speaking, have a different perception about the subject due to their psychological make-up. A different approach in estate planning for women is called for, not due to the technicalities or the need for different estate-planning tools but because in their endeavor to take care of everybody else in the family, their own needs often take a back seat.
Regardless of marital status or net worth, women need to make decisions and arrangements today in order to protect themselves, their husbands or partners and other loved ones in case of incapacitation or untimely death.
One key aspect of estate planning that women often overlook is what will happen when their husband, parents or other relatives die: Where would you turn to if the people that you are depending on either financially or emotionally are disabled/ die or are otherwise incapable of supporting you anymore?
So, what are the mistakes to avoid?
- Picking the right executor: An executor is a person to whom, in your will, you confer an authority to carry out your directives with regard to distribution of your estate. You may have done a great job in drafting your will but an untrustworthy or inept executor can lay waste to all your effort. Hence, it is important you put a lot of thought behind making this choice. The criteria to select an executor should be wisdom, a sense of fairness and a matured outlook and not his or her relation to you. For example, if your youngest child fits the bill better, it would be wrong to pick your eldest over him out of a sense of duty. Remember, too, to ask permission before naming someone your executor. The person you select may not be ready or willing to take the responsibility attached with the job.
- Leaving a LIVING TRUST: A living trust allows you to pass assets to your heirs without a probate and is an important estate-planning tool. But you must remember to transfer your assets to this trust physically.
- Do Not Delay: Many people delay estate planning because apart from the associated expenses, it is unpleasant to contemplate one’s own mortality. Also, the young have other priorities and believe this kind of paperwork can be done once they reach old age. A BIG MISTAKE if you have children.
If you don’t create an estate plan, you are letting the court decide how your assets are to be distributed which may not reflect your wishes. Without a road map, it just makes it difficult for everyone.
Here are 8 critical things that women should know about estate planning:
- Everyone needs a will
- Choosing an executor wisely
- Trusts can keep your assets in the hands of those you choose
- Consider passing on assets before you die
- Evaluate your estate plan after your spouse dies
- Have nominations in all your accounts
- Maintain a joint account with your spouse
- Learn how to manage your accounts
The biggest estate-planning mistakes can be easily avoided with a few signed documents and some vigilance. Since it requires specialized knowledge, Pinnacle advocates that it be done under the expert opinion of legal counsel.