Women and Money: Taking Care Of You
Today, like so many other women, you may be facing the challenge of balancing family while you're still working. Your children grow just as your parents slow down and need help with daily activities. Traditionally, women have been the caretakers of their families' older and younger generations. But providing care for family members is becoming increasingly complex, as doing so may require a leave of absence from work and drain one's bank account. Such income disruptions significantly affect women's ability to save money, plan for retirement, and maintain financial security. In addition, older married women often provide care for their elderly husbands. Too often adult daughters, mothers, and wives prioritize their family members above their own needs.
Who Will Help You?
Women and their family members need to look toward the future and start the financial planning process as soon as possible to avoid the economic catastrophe resulting from putting off estate planning.
Your Planning Process
Every woman needs to balance her financial past with her financial future. By addressing the management of your finances as soon as possible, you can avoid disputes and build financial independence. However, the estate plan documents are just as important as the financial plan, if not more so for women. Here are a few basic things to consider as you start your estate planning process:
- The Will: Your formal legal document that directs the distribution of your assets. Without a will, your state's intestacy laws will determine the assets' distribution. Only through a formal legal will can you designate your executor, guardians for minor children, and other fiduciaries. While a will has the power and potential to distribute all assets, your attorney may also recommend a trust or beneficiary designation(s) to transfer assets outside of probate (the judicial process that establishes the validity of a will). Wills are a means of providing security, both for yourself and your loved ones. A qualified legal professional can help ensure that your will is written correctly and contributes to the overall success of your estate plan.
- Durable Power of Attorney (DPOA): This tool allows individuals to appoint a trusted relative or friend to represent them in legal and financial matters. The powers granted may be limited or broad in scope and vary from state to state, so they may need to be re-executed upon change of residency. DPOAs remain in effect during disability or incompetence – although, in the event of incompetence, a guardian or conservator could revoke them. Some financial institutions are reluctant to recognize a durable power of attorney, so exploring any potential problems beforehand is worthwhile.
- Revocable Trusts: A revocable trust allows you to retain control of your property while delegating the responsibility for daily management to others. This arrangement will enable you to change the trust in any way and at any time, as needs and circumstances dictate.
- Informal Arrangements: You can also informally transfer property to your heirs, in many cases free of gift taxes, in exchange for being taken care of for the rest of your life. This arrangement, however, should be approached with extreme caution. Even with the best intentions, adult children could deplete assets through poor management, divorce, or creditor claims. Once the assets are gone, an aging parent would become dependent on family members' goodwill.
Review Your Plans
Review these arrangements periodically as needs and circumstances change. You may also consider consulting a qualified financial professional with experience working with women in your situation. For two decades, the Hurlow Wealth Management Group has helped women and their families identify appropriate financial planning strategies and estate planning opportunities. If you need help, schedule a FREE consultation with one of our professional investment advisors to get started taking care of you.