Because women outlive men on average, they often control the disposition of a couple’s assets. Therefore, women need to develop an estate plan that will facilitate their wishes and desires with respect to how their estate should be distributed to their heirs.
Whether to go with a simple will or a trust is one of the first questions to be answered. If federal or state-level estate tax mitigation is a factor, a trust should be considered. If estate taxes are not a concern, a trust should still be considered as a way to avoid probate. Although there are costs and time delays associated with the probate process, establishing a trust is more expensive than having a simple will prepared, so women should weigh the costs and benefits of each approach and decide what works best for them.
It is also important for women to consider whether lifetime gifting is an estate planning technique that they should employ. Historically, estate planners encouraged lifetime gifting as a way to remove assets from your taxable estate. However, now that the estate tax exemption is so high, women should consider whether it is better to keep assets in their taxable estates to give their heirs the benefit of receiving a step-up in basis upon their death.
Finally, portability of a deceased spouse’s unused estate tax exemption should be considered. This could lessen the importance of complex trust planning. Because we will address portability in future posts, I will forego a more detailed discussion here and simply say that portability is a technique that should be explored in the development of an estate plan.
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