Facts All Women Should Know About Estate Planning

Traditionally, women have taken a back seat when it comes to estate planning, but perhaps it is time they take a more hands on approach. Women make up 42% of widowed Americans who are 65 or older, which means that women are more likely to witness the effects of an estate plan first hand.

To better understand their own estate planning desires, women should know the following estate planning facts:

• Starting this year, a deceased spouse’s unused estate tax exclusion can be added to the surviving spouse’s exclusions. This means that the surviving spouse’s $5 million exclusion can become as much as $10 million. The deceased spouse’s executor must file an estate tax return in order for the potential additional $5 million exclusion to transfer.
• Additionally, a surviving spouse has nine months to disclaim any gifts from the deceased spouse.
• Married couples can share each other’s $5 million lifetime gift exclusion.
• An individual can use a living trust to hold assets during his or her life, which can be beneficial in the case of future dementia. A living will can also be beneficial if an individual owns real property outside the state he or she lives in. An individual will use a will to appoint a guardian for a child.
• When choosing who to appoint under a durable power of attorney, an individual should consider a close family member and should ensure that the preferred individual is willing to take on the responsibility.
• When choosing a guardian for his or her child, an individual should, again, consider family members first. It is important to consider the potential guardian’s lifestyle, values, location, and household when making this decision. Additionally, an individual can split the responsibility by putting one party in charge of the child’s welfare and another in charge of the child’s money.
• Married couples should consider putting enough money in a joint account to cover any immediate costs if one spouse were to die. It is important to remember that if the deceased spouse has a separate bank account, the surviving spouse may not have access to that money right away. Couples can also opt to have a joint tenancy with the right of survivorship account.
• Keep in mind that the $5 million dollar estate tax exclusion ($10 million for couples) is scheduled to drop back to $1 million in 2012.

See Deborah L. Jacobs, Estate Planning For Women (And the Men Who Love Them), Forbes, May 19, 2011.