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:
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.
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.
