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Women and Estate Planning Basics

J Dart
Jillian Erika Dart, Esq., CTFA, AEP
Senior Vice President, Manager of Trust and Estate Solutions
[email protected]
(585) 419-0670 x41935

Women have unique concerns when it comes to estate planning. On average, women live 5.7 years longer than men.* This means there is a greater chance that you need your assets to last for a longer period of time; there is a greater need to plan for incapacity; and, you need to take responsibility for your own estate plan.

What is an estate plan?

An estate plan is a map that captures the way you want your personal and financial affairs to be handled in case of your incapacity or death.

Planning for incapacity

What would happen if you were unable to make decisions or conduct your affairs? Failing to plan may mean a court would appoint a guardian, and the guardian might make decisions that would be different from what you would have wanted.

Health-care directives can help others make sound decisions about your health when you are unable to. There are also tools that help others manage your property when you are unable to, including a durable power of attorney and joint ownership.

Wills and probate

A will is a legal document that directs how your property is to be distributed when you die. You name an executor to carry out your wishes as specified in the will.

Most wills have to be probated. The will is filed with the probate court. The executor collects assets, pays debts and taxes owed, and distributes any remaining property to the named beneficiaries.

For most estates, there is little reason for avoiding probate, as the actual time and costs involved are modest. There are several benefits to probate - because the court supervises the process, you have some assurance that your wishes will be abided by, and probate offers some protection against creditors.

There are a number of reasons for avoiding probate as well. For complex estates, probate can take up to two or more years to complete, and wills and other documents submitted for probate become part of the public record, which may be undesirable if you have privacy concerns.

Probate may be avoided by owning property jointly with rights of survivorship; by completing beneficiary designations for property such as IRAs and retirement plans; by putting property in an inter vivos trust; and, by making lifetime gifts.

What happens if you die without a will or an estate plan?

Whether or not you have a will, some property passes automatically to a joint owner or to a designated beneficiary. Property that does not pass by beneficiary designation, joint ownership, will, or trust passes according to state intestacy laws. These laws vary from state to state and they specify how property will pass.

Trust basics

A trust is an estate planning tool that can protect against incapacity; avoid probate; minimize taxes; allow professional management of assets; provide safeguards for minor children, and other beneficiaries; and protect assets from future creditors. Most importantly, trusts can provide a means to administer property on an ongoing basis according to your wishes, even after your death.

A trust is a legal entity where someone, known as the grantor, arranges with another person, known as the trustee, to hold property for the benefit of a third party, known as the beneficiary. The grantor names the beneficiary and trustee, and establishes the rules the trustee must follow in a document called a trust agreement. With a trust, you can provide various interests to different beneficiaries. For example, you might provide income to your children for life, with the remainder going to your grandchildren.

You can create a trust while you are alive (a living or inter vivos trust) or at your death (a testamentary trust). A trust you create during your life can be either revocable or irrevocable. You retain the right to change or revoke a revocable trust. An irrevocable trust cannot be changed or revoked.

Transfer taxes

When you dispose of your property during your lifetime or at your death, your transfers may be subject to federal gift tax, federal estate tax, and federal generation-skipping transfer (GST) tax. Your transfers may also be subject to state taxes.

Lifetime giving

Making gifts during one's life is a common estate planning strategy that can serve to avoid probate and held reduce transfer taxes. Take advantage of the annual gift tax exclusion, which lets you give up to $16,000 (in 2022) to as many individuals as you want free of gift tax.

As always, we encourage you to reach out to your advisor with any questions or concerns you may have about estate planning.

*NCHS Data Brief, No. 427, December 2021. ©2022 Broadridge Investor Communication Solutions, Inc. All rights reserved. This material provided by Jillian Erika Dart.

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