Gifts + Estate Planning Women and Wealth

6 Reasons Why Estate Planning Should Be A Priority for Women

BY Leslie Thompson | CFA®, CPA, CDFA™, Chief Investment Officer, Co-Founder | Aug 18, 2021

Estate planning isn’t just for the wealthy.  Currently, women in the United States control one-third or more of total household financial assets – yet most women don’t have an estate plan. Why is that? 

Many women may not have the knowledge or access to information about estate planning, leading to a misunderstanding of how it works or where their assets go upon death.  As the number of women business owners and high-earning professionals increases, it is more important now than ever for women to take control of their finances and estate plans. 

To successfully achieve financial goals and pass wealth onto the next generation, you’ll need a detailed estate plan in place.  Here are six reasons why estate planning should be a priority for women:

1. Women live longer than men

Generally speaking, women tend to live longer lives than men.  A recent study shows that the average life expectancy for men is 76.1 years, while the average life expectancy for women is 81.1 years.  Researchers estimate that the gap in longevity will continue.  The U.S. Census Bureau projects that by 2060, women will live to an average of 87.3 years.  Comparatively, it is projected that men will live to 83.9 years.

So what does this mean for women?  It means that women will need their assets to last longer than men.  And it means that wives will likely outlive their husbands (if married), so women will likely inherit their husband’s estates and will probably have the last word about the final disposition of assets going to the couple’s heirs.

2. Women are wealthy

Women control approximately $14 trillion, or 60 percent, of the financial wealth in the United States.  That number is only expected to increase in the coming years.  It’s vital for women to get professional financial advice and guidance, especially regarding investing, charitable giving, and tax planning.  You’ll want to ensure that your assets and property are distributed according to your wishes after you pass away.

3. Women are professionals

Women make up about 57.5 percent of professional and corporate occupations.  Women in high-litigation professions such as medicine, law, and real estate can benefit from asset protection planning. 

Asset protection includes removing your assets from the reach of creditors without the risk of fraud, tax evasion, or perjury, which makes sense for women who may have significant assets and could be a likely target of litigation, such as medical malpractice.

4. Women are business owners

More than 8.6 million businesses are owned by women in the U.S., generating approximately $1.3 trillion every year.  Women who own businesses of all sizes need to protect their assets and have a succession plan for their business.

5. To reduce estate taxes

The federal tax exemption for 2021 is $11.7 million per individual.  This means that if your estate is worth more than $11.7 million at the time of your death, the value of your assets over the exemption of $11.7 million will be taxed at 40%.  It is essential to keep in mind that the value of an estate includes all assets at the time of death, including life insurance, retirement accounts, investment accounts, and real estate.  While Indiana doesn’t have a state death tax, several states in the U.S. have death taxes that may be assessed at the time of death.

6. Women typically earn less than men throughout their lives

According to recent statistics, women who work full-time only earn 81.2 cents for each dollar a man earns.  Women also typically work fewer years than men as they take on caregiving responsibilities for their homes and families.  This further reduces their ability to save money throughout their lives.   

The bottom line is, on average, women earn less money over their lifetimes than men.  Women face the challenge of making fewer dollars last over a more extended period, so it should be an essential part of your financial planning process to get sound advice regarding retirement, investing, wealth planning, and estate planning.

Today’s women face different circumstances than men, making it imperative to educate themselves about estate planning and a secure future.  Contact us today to consult one of our experienced estate and wealth planning professionals and start your estate planning journey.

This content is developed from sources believed to be providing accurate information, and provided by Spectrum Management Group. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.