Estate planning is for everyone. A few simple steps—like writing a will or setting up a trust—can save your family trouble and confusion after your death, reduce expenses, and ensure that your property goes to the people you intend. But it is particularly important to think about estate planning if you are a woman. Statistics show that you are likely to live longer than your husband, so you should be familiar with some of the laws about receiving property under a will or trust. You are also more likely to have a large estate subject to estate taxes, because your estate may include assets that both you and your partner accrued during your lifetime. Estate planning can dramatically lower your taxes in that case.
Unfortunately, many women put off planning their estate. According to a recent survey by Prudential, only 14 percent of women have done some form of detailed estate planning. Are you one of the millions of American women who have not written a will? Perhaps you think that you don’t need one, because you plan to leave everything to your children. Maybe your husband takes care of financial planning. Or maybe you’ve put off planning your estate because you just don’t want to think about dying. In fact, estate planning is not costly and time-consuming, but it does pay big dividends. Talking to your lawyer is a first step to an estate plan that accomplishes your goals.
If you die without a will, or without making a trust that conveys your assets to beneficiaries, you are said to die intestate. Then your property is distributed according to the law in your state. This doesn’t mean that your money will go to the state. This only happens in very rare cases in which there are no surviving relatives. But the law does make certain assumptions about where you’d like your property to go. In some state, intestate descent laws prefer “blood” to “marriage” and will give a share of your estate to your children or to your parents, rather than to your surviving spouse. In other states, your surviving spouse inherits your entire estate and your children (and parents) are entitled to nothing.
In addition, the intestacy rules in most states give no part of your estate to family members who are not related to you by blood, marriage, or adoption, such as stepparents or life partners. For this reason, it is particularly important for unmarried couples to write a will. You might live with your partner for thirty years, but that makes no difference—if you die without a will, the state intestacy laws will apply, and your partner could be left with nothing.
A will is simply a document in which you specify who gets your property when you die. The people and institutions inheriting your property are called beneficiaries. Wills are relatively easy to make, and you can pretty much leave your property to anyone you wish—no one can stop you from leaving property to your grandchild, your lover, or even the local animal welfare center if you wish.
However, there are some limitations on your freedom to give away your property in your will. If you are married, you can’t disinherit your spouse. State laws generally entitle a surviving spouse to take a portion of the deceased spouse’s estate—regardless of the deceased spouse’s will or estate plan. For example, if your husband dies with a will that makes no provision for you, or conveys less than a certain percentage of his assets, then you can take a statutorily defined elective share of the estate. This means that you can choose to accept the amount allowed by law, usually one-third or one-half of the estate. You do not have to take an elective share of the estate—it’s your choice. If you do not exercise the choice, the will stands and the property is distributed as stated in the will. (Elective share provisions go both ways; your husband can take an elective share if you die first.)
Elective share provisions are troubling to many people entering into second marriages, particularly late in life. Even if you’ve only been married a couple of years, your surviving spouse would be eligible to take up to one-half of your property at your death, even if you wanted it to go to your children and your will reflected that. Recent revisions to the Uniform Probate Code (which has been adopted by a number of states) provide a “sliding scale” for surviving spouses who take against the will. Under this approach, the longer the marriage, the higher the elective share. If the marriage lasted only a few years, the percentage could be quite low, minimizing one source of worry for older couples. You or your husband can also voluntarily give up your right to a share of the estate in a pre- or post-nuptial agreement.
You should also talk to you lawyer about whether a trust is a good option to consider when planning your estate. If all of your property is in a trust, then your property does not need to go through probate, which may save your loved ones time and expense. There are many different types of trust that you can choose between, depending on your needs. Living trusts are a particularly useful estate planning tool for women. Because women are statistically likely to outlive their husbands, it is important for them to make plans for the issues they might face in old age, like incapacity or the need for a guardian. Living trusts may also be a good option if you can no longer manage your own finances.
You can transfer your property and other assets to a trustee, who can then manage your assets and distribute a regular income to you for the rest of your life. A living trust can also avoid the need to appoint a guardian of your estate if you should become disabled. Upon your death, your trustee can distribute your assets to the people or charitable organizations of your choice. If at any time after you create your trust, you change your mind as to any of your beneficiaries (i.e., you want to add one or eliminate one), you can make a simple amendment to your trust by a written letter or memo signed and dated by you and delivered to your trustee.
Alternatively, you might want to consider a trust for the benefit of others, such as minor children and grandchildren or disabled relatives. A trust can provide a mechanism for managing property and making distributions over the years, without court supervision. Certain trusts can also provide ways of maximizing tax credits and exemptions.
You can also use other will substitutes to get property to your beneficiaries without having to go through probate. For example, pensions, life insurance, and Individual Retirement Accounts go directly to the named beneficiary after your death. Talk to your lawyer to make sure that all these ways of leaving property are coordinated with your estate plan.
Your Law is prepared by the ABA Division for Public Education. Articles in Your Law do not necessarily represent the official policies of the American Bar Association or of the participating firms, and the information contained in the newsletter should not be acted on without professional advice. Your Law articles focus on broadly applicable legal principles. Contact your lawyer for the specific law in your state. Copyright © 2003, American Bar Association, 541 North Fairbanks Court, Chicago, IL, 60611-3314.
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