Women and Estate Planning: The Need to Be Nontraditional
I am now getting to the age where I have more friends working on their
second marriage than their first. Some of those still in their first
marriages often have in-laws or grandchildren living with them. And I
can\’t tell you how many families I know where the wife is the primary
bread winner and the husband the primary Caregiver. With the mixture
and matches that come with families in this modern world, it is
becoming almost unusual to find a traditional family. .
Nevertheless, we women often view estate planning in a traditional way.
Traditionally, the husband alone met with the attorney to do the estate
planning while the wife was relegated to taking care of non-financial
matters. Many husbands and their attorneys often felt that wives needed
protection from themselves in the event the husband were to die first.
Such a traditional approach often caused great financial and emotional
burdens on the wife. For example, it was not unusual for a husband to
have a Will that stated that all of his assets would be kept in trust
after his death to be used for the benefit of his wife during her
lifetime. The Will might say that the wife would receive all of the
income earned from investing the assets in the trust. Many Wills were
silent as to what would happen if the wife needed more than the income
that was being generated. Our office had a case where the husband died,
many years later the trust is worth $700,000, the income per year is
approximately $35,000, but the surviving wife who is now 80 years old
wants to go into an assisted living facility that will cost $60,000 per
year. Since the trust does not allow the trustee to use some of the
principal, she is not be able to receive those additional funds even
though using some of the principal would not fully deplete the trust.
In other cases, the husband did grant some flexibility to the trustee
to take care of his wife but she would be forced to call a friend,
relative or financial institution serving as trustee every time she
needed funds. Even though the trustee was doing what he felt was a good
job, my concern is that having to ask for money could very well hurt
the women\’s emotional well being.
A wife should not only be involved in the estate planning process, but
she should be involved in the financial process during the couple\’s
joint lives. The wife should be acquainted with the professional
advisors, including the estate planning attorney, certified public
accountant and financial and insurance advisors so that she is not
forced to deal with strangers if the husband dies first. She should
review financial records and have a general understanding of the
family\’s finances. There are many publications and courses that can
help improve someone\’s knowledge of finances. We try to insist that
when we are doing estate planning for married couples that both spouses
are present at meetings and at the time the documents are reviewed and
signed. In dealing with second marriages, particularly with children
from both marriages, it is often advisable for each spouse to have a
separate attorney doing his or her planning. If the wife is not
comfortable with the estate planning attorney or any other advisor, she
should insist that such professional be replaced with someone who she
is comfortable with.
We generally recommend that unless there are serious issues concerning
a spouse\’s ability to manage funds that he or she be involved in the
decision-making process after the husband dies. For example, we have
often named the surviving spouse and a financial institution as
trustees for the surviving spouse and granted great flexibility to the
trustees. In most cases, we allow the surviving spouse to change the
financial institution so that if the bank or trust company is not being
cooperative, he or she can pick someone who he or she feels comfortable
with. On the other hand, the funds would be professionally managed and
protected by the institution. This can be an excellent combination to
satisfy a spouse\’s desire that the money be protected for the benefit
of the surviving spouse and allow the spouse to be involved in the
process of managing the trust.
Certainly, we women need to take responsibility for protecting
ourselves, our spouses and our families when it comes to financial
planning. This is a place where we can no longer rest on tradition.