Estate planning is especially important for women in Oakland and the Bay Area because women tend to live longer than men, so there is a higher likelihood that women will be managing the family’s assets and money alone as well as for a longer period of time. In addition, it is still the unfortunate truth that women earn less than men on average, and so may be in a more difficult financial position if/when their spouse dies before them. Since none of us has a crystal ball, it is never too early or too late (except, of course, once you’re gone) to do estate planning to protect your income, assets, and what you’ve worked your whole life to accumulate.
First, everyone needs at least a will. A will is a simple document that outlines who you want to manage the distribution of your estate once you’re gone, designates a guardian for your child(ren), and specifies the distribution of your assets.
Second, if you have an estate of more than $150,000 in California (your gross estate without regard to debt), then you and your family, and your assets, will benefit from a living trust to preserve your wealth and ensure that you are protected in any circumstance.
Third, estate planning – good estate planning, that is – includes your Powers of Attorney, which designate who will make decisions on your behalf should you become incapacitated. Do you want to be kept alive on a machine? Well, if not then you better have a Power of Attorney for medical care so that doesn’t happen. This applies to adult children as well, so if you have a child that is over 18, do not assume that the doctors/hospital will automatically look to you to make decisions for your adult child.
Fourth, trusts allow you to manage the distribution of your estate in the way you want. If you don’t want your child(ren) to receive their entire portion of your estate at 18 (which is what happens without a trust), and perhaps want to hold back some of the money for college expenses, for example, then you need to consider a trust.
Fifth, consider estate tax and other tax consequences. You want to make sure that your estate planning takes into consideration all the potential taxes, and avoids them in all the legally-appropriate ways.
Sixth, choose an administrator/executor with some financial savvy. This person will be responsible for wrapping up your estate, and perhaps managing your assets, so you want them to be trustworthy and capable.
Seventh, make sure your life insurance and retirement accounts (including 401Ks, IRAs, etc.) have the correct beneficiaries. If your husband’s 401K names his ex-wife as beneficiary, then you could be in trouble if he passes before you.
Eighth, make sure you know how to manage your accounts, including bank accounts, investment accounts, retirement accounts, and debts. Know who to contact, names of institutions and all account numbers. Ultimately, it is likely that you will be on your own managing all of these accounts, so the sooner you know how to do so, the better off you will be.
One final note: The best time to learn what you need to learn, and to put your planning into place is not when you are emotionally distraught or grieving. The best time is to do so when you are healthy and happy and able to make decisions not under pressure. The best time to make sure you are prepared, really, is now.