Mar 10, 2022 3 min read

One of the things we learned during the pandemic was how quickly life can change.

Almost 1 million Americans have died from the virus. While some of these people had serious underlying conditions, many did not.

And, early in the pandemic, we saw many people did not have enough emergency money. As it progressed, we learned that many more did not have proper estate planning in place.

Everyone should have basic legal documents in place. This includes things like a will and power of attorney. People who die without a will, die intestate. This means the laws of the state and not necessarily the intentions of the parties will decide how assets will be distributed. Instead of a spouse, the court might award assets to children or other family members.

A power-of-attorney document appoints someone to make decisions for you when you do not have the capacity to so on your own. These decisions could be medical or financial. It is important to have an alternative person in case both a husband and wife are injured in the same accident. Blended families where there was a previous marriage sometimes complicate this situation.

Now, we are going to look at the special challenges women face with estate planning.

Often times, women marry men a few years older than themselves. Additionally, when spouses are the same age, women often live four to six years longer than men. At older ages, there are more widows than widowers in our society.

In fact, the average age a woman becomes a widow is 59.

It is also a fact that 80% of men die married while 80% of woman die single. For most couples, income goes down at the first death. One Social Security check stops and pensions often only pay 50% to a surviving spouse. The good news is it’s the smaller SS check that stops, but many expenses stay the same. Property taxes, insurance, a new roof and utilities often stay the same.

One item that can go way up that many people do not think about is income taxes.

Couples who are married and filing jointly get more free money from their personal exemption and the tax brackets are almost twice as wide. There may be some planning opportunities in the year of the first death, because you may get to still use married-filing-jointly status. This changes upon the first death is often known as the widow’s penalty.

It is important that both spouses understand their joint financial condition.

Often times, one partner is dominant and that may work while both are alive. If the dominant spouse is the one who passes away, the survivor may be totally confused. It is also important that both spouses are involved in decisions such as when to begin Social Security and the amount of debt that the couple has.

These things can make a huge difference to the survivor.

Your Financial Future is written by certified financial planner Gary W. Boatman, MBA and CFP, who also wrote the book, “Your Financial Compass: Safe Passage Through The Turbulent Waters of Taxes, Income Planning and Market Volatility.” If there is an area that you would like to see discussed in the column, send your suggestions to gary@BoatmanWealthManagement.com.