Truth is, men and women can make the same mistakes, such as avoiding estate planning for as long as possible, not putting enough thought into the plan, or not properly executing their final estate plan.
But because women, typically outlive men, they can most ill-afford estate planning missteps. "Women need to be fully engaged in the estate planning process because depending on age difference, they probably will be the survivor and the one to implement the plan," says Robert Riedl, director at Endowment Wealth Management. "Women can be too trusting of their spouse and become too dependent on their husband paying bills, filing taxes, maintaining insurance coverage and more. This leaves them vulnerable to not knowing what they don’t know, whom they should trust or even being able to operate the household if something happens to their spouse."
Thinking about end of life issues is a necessary evil. It is essential for women to take control of their finances. Do a good job of planning though, and not only will you have peace of mind, so will your loved ones.
Here’s where you can go wrong.
Women accidentally disinherit their children every day because they don’t own their property properly. "This tragedy is 100% preventable and often occurs in a second marriage," says Wendy Witt, an estate planning attorney and director of the Wealth Counsel’s Advisor Forum, a community of estate planning attorneys. Many couples own their property as Joint Tenants with Right of Survivorship. As a result, at an owner’s death, the property passes automatically (and by operation of law) to the surviving spouse – and not to the children. Children from a previous relationship are automatically and accidentally disinherited.
"It is essential that you understand how you own your property and that ownership matches your estate plan," says Witt.
Lack of documents
"More than 70% of all women leave more instructions with a babysitter when they go out for one evening than when they’re going to be gone forever and can’t home again," says Witt.
If you become disabled or die without leaving instructions, the state will decide gets what; the court will decide who raises your children; and someone, not of your choosing, will determine how your children will be raised.
"It is essential that you sign a Temporary Authorization for Minors so your children don’t end up in protective custody (foster care)," says Witt. A will, where you name guardians, protects your children when you no longer can.
Terri Schiavo was kept alive for 15 years while completely brain dead because she didn’t put her wishes in writing. "Unless you take action and put your wishes in writing, you are not protected. Have your wishes translated into legally binding documents," says Witt.
In addition to a will, talk to an estate planning attorney or financial advisor about health care directives, power of attorney and other essential documents.
Assume, assume, assume
You know what they say about assuming. Women may assume that their will has taken care of their last wishes and bequests, however, assets that pass by contract (IRAs, annuities, life insurance), or by operation of law (jointly owned accounts), trump what is designated in a woman’s will, says Jill Williams, a certified financial advisor with MetLife Premier Client Group. "If she hasn’t updated not only her will, but also her beneficiary designations, her estate may not transfer according to her wishes."
Some women also don’t plan for the possibility that their children might get divorce and therefore, jeopardize mom’s intended plan. "Revocable Living Trusts can ensure provisions that protect their children from potentially losing half of their inheritance to an ex-spouse," says Williams.
Others don’t think about the fact that their surviving spouse, yes, may fall in love and marry someone else. Worse still, they don’t contemplate the possibility that he might not take care of the kids in his documents. "To avoid this, divide the assets equally and use a trust for dispositions," says John Scroggin, a partner with Scroggin & Company, which specializes in estate planning.
Set it and forget it
An estate plan is not etched in stone. As your life changes so will the document. When you marry, get divorced, your spouse dies, a child is born. All such changes will impact your plan. Review documents annually and update them as necessary.
Also, when you sign a document, always get a copy and have various copies with trusted advisors and important people in your life. "I have a situation now where a client left their sole copy of the document in a safe and they are the only one who has the code," says a financial advisor and portfolio manager at a leading global financial services firm. There’s also a catch with leaving original wills in a safe deposit box. "They are often sealed by the bank and the attorney will need to get court permission to open it," says the financial advisor.
Do it yourself
A woman may be the queen of DIY, but estate planning is no time to show what you can do all by yourself. "Designing, drafting, and implementing your own estate plan is a mistake. Being independent and self-sufficient is an admirable trait, so is knowing when to ask for help," says Witt.
She points out that the tiniest planning, drafting or execution error can derail the entire plan and put you, your family and your assets at risk. "No computer program, library book or online service is a substitute for individual counseling and professional drafting," says Witt.
Give in to discomfort
Some women may find calling an attorney, facing family problems, and thinking of someone else raising their children extremely difficult so they make the mistake of allowing that discomfort stop them from taking action to protect their loved one.
Says Witt, "Know that acting outside your comfort zone will make you feel better in the long run and empower you to protect your spouse, children, pets and other loved ones. You must take that step forward and acknowledge to yourself that they are more important than your own temporary discomfort."