Taking care of yourself and your family
A guide to estate planning
Women often make caring for others a priority while neglecting their own needs. As you get older, it’s crucial to set an estate plan that will provide for you and everyone who’s important to you.
Ideally you want to have enough money to last your entire lifetime and to provide for your family after you’re gone. Here are some estate-planning essentials:
- Make sure your money will last a lifetime. Your estate plan should ensure that you have income for life and that unexpected circumstances won’t deplete your retirement savings. Annuities and long-term care insurance are some solutions that can help provide financial security and peace of mind.
- Write a will. Work with an attorney to create a will that details exactly how you want your estate divided. If you pass away without a will, a probate court will distribute your estate, which might result in family problems and acrimonious lawsuits.
Review your will, life insurance beneficiaries, and other directives at least every two years. Update them after significant life events such as a birth, death, or divorce.
- Make a living will. Powers of Attorney, Health Care Advance Directives, and a Living Will are absolute necessities. That way, if you are no longer able to make decisions, your financial affairs will be handled responsibly and your wishes related to healthcare will be carried out. Select people who you trust and are capable of taking on the responsibility.
- Take stock of your assets. Add up all of your assets such as cash, retirement savings, mutual funds, stocks, real estate, cars, art, and collections. Then subtract liabilities such as your mortgage or other outstanding debts. Once you factor in your age and life expectancy, anticipated annual income needs, and investment returns, you can estimate how much of your assets will be left to pass on.
- Protect your estate from being decimated by taxes. Without careful planning, the assets you leave your family could be reduced significantly by taxes. In 2014, $5.34 million of an estate is excluded from estate taxes with a 40 percent federal estate tax rate on the balance. Under current law, if you are married and the first spouse does not fully utilize their exclusion amount, the balance can be transferred (or ported) to the surviving spouse under certain circumstances. Trusts, gifts, charitable donations, and life insurance can help minimize estate taxes.
- Consider contributions that live on. If you structure your lifetime and post-mortem charitable giving properly, using a portion of your estate to fund things like a college scholarship or charitable program can provide you with tax and income advantages while you’re alive
Now’s the time to start putting yourself first. And with smart estate planning, the people you care about will have more than photographs and keepsakes to keep your memory alive.