Estate Planning Essentials: Key Strategies Every Woman Should Embrace

Estate planning goes beyond just assigning assets. It's about maintaining authority, dignity, and ensuring your finances benefit your loved ones.

We understand that the term “estate planning” may seem reserved for the affluent, but it’s a necessity for every adult. Yes, every adult should consider it.

This week, a prominent elder law attorney and former New York State legislator Ann-Margaret Carrozza discussed the risks of delaying this vital aspect of financial planning.

From understanding trusts to the pitfalls of conservatorships, to safeguarding your home while retaining control, she provides essential insights.

Estate Planning: Is a Basic Plan Sufficient?

Jean Chatzky: Let’s explore what actions individuals should take, starting with simpler solutions. For many, a basic estate plan will suffice. Let’s discuss what a basic estate plan entails and who it benefits.

Ann-Margaret Carrozza: At its core, estate planning enables me to create advance directives that appoint trusted individuals to carry out my wishes if I’m unable to do so. It's crucial to establish a healthcare proxy, which doesn’t require a lawyer and is designed for DIY.

Additionally, a financial power of attorney is important for designating someone to make financial decisions on my behalf in the event of temporary or permanent incapacity. We need both advance directives and a will that details not only asset distribution but also the method of distribution. If I know my 48-year-old son hasn’t saved anything for retirement, I might reconsider leaving his share outright. Customizing how he receives his inheritance could be wise.

Trusts: Accessible to Everyone

Jean Chatzky: Let’s delve into the various types of trusts and their relevance for families with moderate incomes. They range from irrevocable to revocable, and testamentary to living. Can you clarify these types and their suitability?

Ann-Margaret Carrozza: A living revocable trust is psychologically appealing. It allows us to re-title assets, creating a personal entity. When I pass away, these assets automatically transfer to my heirs.

As the grantor and trustee of a revocable trust, I maintain full control over the assets during my life. After my passing, they go to the beneficiaries specified in the trust.

If there are concerns about liabilities, whether from estate taxes, long-term care, or general risks, we might consider a stronger trust structure. An entirely irrevocable trust can be problematic, and I often question its necessity. There are many trust types between revocable and irrevocable.

Your Legacy Is More Than Just Numbers

Jean Chatzky: For those who haven’t established an estate plan or haven’t revisited theirs in years, what best practices should they follow, and how often should they review it?

Ann-Margaret Carrozza: Don’t let perfection prevent you from making progress. Avoid procrastination. This is your final act as a parent, determining how you pass assets to the next generation. The term last will and testament, derived from Greek, means my final words and wishes. We should aim to be thoughtful in our approach, ensuring that asset distribution is customized. It’s not just about naming heirs; it’s about how they receive their inheritance. People should know that consulting an attorney for every detail isn’t necessary. Taking initiative and educating oneself can empower individuals. Clearing tasks from our mental checklist can bring a sense of relief and happiness.