Women live longer than men, make less money over their careers and have less in savings due to wage discrepancies and time taken out of the workforce to raise children — which is why it is important for women to know these important facts about estate planning:
- The unused portion of a deceased spouse’s estate tax exemption can be added to the surviving spouse’s exemption, which means the surviving spouse can have an estate tax exclusion of up to $10.9 million in 2016. However, the executor filing the deceased spouse’s estate tax return must claim this exemption transfer.
- Assets inherited or received as a gift from a spouse are not taxable. A surviving spouse must renounce any gifts received from the deceased spouse within nine months to allow those gifts to be transferred to another family member or put into a trust for the surviving spouse’s own benefit.
- Married couples can participate in “gift splitting”, which means they can share each other’s $5.45 million lifetime gift exemption and give more to their children now tax-free.
- A will and a living trust are both essential estate planning tools, and although both can be used to transfer assets upon death, they serve separate purposes. A living trust can take effect while you are alive or after death, and allows you to hold assets for your benefit during your lifetime, which can be helpful in the event of a future dementia diagnosis. In addition, a living will can be useful if you own real estate in another state. A will only takes effect upon death, and is used to appoint guardians for minor children, cover assets that are not part of a living trust and create trusts that kick in after death.
- Women need to execute financial and healthcare durable powers of attorney and consider choosing a trusted, responsible person who is agreeable to assuming the responsibility of making financial and/or medical decisions on your behalf in case of incapacity.
- Don’t own your own life insurance policy as the proceeds may be subject to estate tax after you die. Instead, designate a spouse or other family member as owner or set up an irrevocable life insurance trust (ILIT), which buys the policy and holds the proceeds for beneficiaries.
- Keep beneficiary forms for retirement accounts (IRAs, 401(k)s, etc. ) up to date, as they determine who receives the assets of each retirement account.
- Make sure you have access to cash to cover any expenses if your spouse dies suddenly. You may not be able to access a deceased spouse’s separate bank account right away.
At The Estate, Trust and Elder Law Firm, P.L. we help our Treasure Coast clients develop and implement comprehensive estate planning strategies personally tailored to their unique situation, needs, and goals. Contact us for your free initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.