Where There's a Will, There's a Way

As we age, women face a greater risk to their financial independence than men. We tend to marry individuals older than ourselves and we live longer. So it should come as no surprise that we are much more likely than men to be widowed and to live alone.  This makes estate planning a critical element to a woman’s financial strategy.

Most people prefer not to talk about death. But if you choose not to prepare for the inevitable, you could jeopardize what you’ve worked for all your life. Whether you are widowed, divorced, part of a domestic partnership or have never been married, wills and trusts make clear what your intentions are and make sure that your assets are directed to the appropriate parties.

Where there’s no will, there’s no way

Dying without a will means your property will be distributed according to the laws of your state of residence, not necessarily according to what you would have wished. For example, you may have siblings or step-children whom you would like to provide for, but without a will they might not qualify for inheritance under most state laws.

The court would appoint an administrator to manage the property in your estate and make distributions to surviving family members. If there is a surviving spouse or partner, they might receive only a portion of your property, regardless of your wishes. 

If you have children, they would be treated equally regardless of their needs and would receive property outright, typically at age 18.  The court could require that fees be paid by your estate to the administrator, reducing the amount available to your loved ones.

Where the surviving spouse is appointed guardian of the children, the State’s Probate Court will generally require an accounting of how, why and where he/she spent the child’s money.

Other negative consequences of dying without a will might include unnecessary estate taxes as well as not communicating any arrangements you might have wished to make for special family members, friends or charities.

Honoring your Wishes

A will is the first step in an estate plan. It declares the wishes of an individual in the disbursement of his or her estate, providing for the legal distribution of assets.

A properly drafted will enables an individual to select the beneficiaries and provides a line of successive beneficiaries who will inherit the property in the event of the death of the primary beneficiary. It can also help protect property for children by establishing trusts, naming trustees and empowering them to manage the property in the estate and distribute income and assets to the beneficiaries according to your wishes. 

A will can help save on estate taxes by creating trusts that can bypass the estate of a surviving spouse, or provide bequests to charities, which are generally deductible from the taxable estate.  Administrative expenses can also be saved through provisions in the will. 

By making clear what your intentions are and making sure that your assets are directed to the appropriate parties, a will also prevents unnecessary emotional burdens on any family, You should consult a qualified attorney to discuss your specific situation and the laws of your particular state.

The Role of Trusts

A trust is generally used to provide for a spouse, dependents, charities and others through the naming of a trustee who holds and manages the assets for the benefit of the trust's beneficiaries. Trusts are often established to minimize taxes in large estates or to provide for heirs who may not be able to handle the responsibilities themselves.

You determine the terms of the trust. For example, a trust can provide for the “sprinkling” of income and/or assets among all children according to changing needs, as decided by the trustee. Distribution of trust assets could also be set aside for the children to be used upon attaining a specific age, or fractions of the principal can be distributed at different ages.

A trust can also protect inherited property from the creditors of a beneficiary.  Most states have enacted “spendthrift” protection laws that generally prevent a creditor from attacking assets which are held in trust for a beneficiary.

To avoid these unintended consequences, it is essential to have a will, no matter your age or the size of your estate. Consult your tax attorney or financial professional to learn more and to put a plan in place.

For more information, tips and strategies for estate planning, visit the AXA Equitable Online Learning Center.

Useful Resources & Links:

• Do You Need a Will?
• What You Need To Know About Your Will
• Wills - The Cornerstone of Your Estate Plan 

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