The truth about women and estate planning

Did you know that women will hold nearly 67% of the nation’s wealth by 2030? Armed with higher life expectancies, a strong record of philanthropic donations, and serving as the majority of custodial parents, women have a significant opportunity to make a lasting impact. With over one-third of the country's financial assets currently under their control, women must strategically plan now to ensure a healthy financial future for themselves and their loved ones.

By staying informed and using resources like FreeWill’s online will-maker, women increase their chances of providing a legacy of love for the people and causes they care about most. Don’t know where to start? Keep reading to bust myths and reveal the truth about women and estate planning.

Myth #1: The Gender Wage Gap does not exist in estate planning

"The World Economic Forum predicts that it will take at least 132 years before the gender pay gap finally closes. Women should focus on making more now to close the gap and worry about estate planning later."

The truth: The gender wage gap still exists. On average, women earn 82 cents for every dollar men earn. The wage gap widens even further for women of color. This reality can hinder women’s ability to accumulate wealth over time. The wage gap may also make estate planning seem less pertinent or pressing for women, but the opposite is true. Effective estate planning empowers women to maximize and protect their resources. It also allows women to allocate their hard-earned assets as they desire.

Myth #2: Women's estate planning needs are not unique

"Having an estate plan at all is what really matters. When it comes to being financially savvy, gender doesn’t play a role."

The truth: While estate planning is essential for everyone, it’s not the same for everyone. On average, women live five years longer than men. This can make estate planning more complex for women. For example, women likely need to plan for a longer retirement, which means they need to save more during their working years. They may also need to account for the healthcare-related expenses of living longer. In addition, women are more often in caretaker roles, whether for children or aging parents. This can limit their time and resources for estate planning, but also makes planning more crucial, as they need to consider who should care for their dependents in their absence.

Myth #3: Without a will, your estate and minor children will go to your next-of-kin

"Women should rely on their loved ones to fulfill their wishes exactly as they are stated. It’s insulting to loved ones to put requests in legally-binding writing. Familial trust should be enough."

The truth: Despite what many people think, family members don’t get to decide what happens to a loved one’s property and children if that person dies without a will. Instead, a local probate court makes this decision based on arbitrary state laws that may not align with the individual’s wishes.

In the United States, out of 13 million parents who have custody of their children, about 82.3% are women. This means five out of every six parents who have custody are women. This underscores the importance for women to take control of their estate planning, especially if they take care of young children. An estate plan ensures their wishes for their children's future care and the distribution of their assets are clear and legally binding. Something so important shouldn’t be left to chance!

To help you avoid this and other common errors that can cause problems later, check out these ten estate planning mistakes to avoid.

Myth #4: Women don’t need to be included in financial decision-making

"Women haven’t always been included in financial decisions. What’s changed now?"

The truth: Women are key financial decision-makers. They currently control more than $10 trillion of total U.S. household financial assets. Within the next three to five years, this figure is expected to reach around $30 trillion. Women will increasingly act as key influences on the way money is spent, managed, and passed on to the next generation. By engaging in thoughtful estate planning today, women can take control of their assets with a plan that reflects their values and wishes.

What estate planning documents should women consider?

1. Last will and testament

A will is a document that outlines the recipients of a person’s estate after they pass away. It also outlines important decisions like:

• Child guardianship: Choosing who will care for minor children
• Pet guardianship: Choosing a caretaker for any pets
• Executor: Naming who will carry out the terms of the will

FreeWill’s online will-maker can help people with simple estates create a free will in just 20 minutes. It can also be used in conjunction with an attorney for more complex estate planning needs.

2. Revocable living trust

Similar to a will, a revocable living trust (RLT) manages and distributes assets after a person dies. However, a RLT is a legal entity, while a will is not. This means an RLT can “own” property. Once someone creates an RLT and transfers the assets, the RLT becomes the owner of the assets. The individual then oversees the trust as the trustee, allowing them to still control the assets in their trust.

RLTs need more upkeep than a will, but they also offer specific advantages. For example, with a trust, an individual’s estate can bypass probate, which simplifies the process of transferring assets to their beneficiaries.

Learn more about the differences between a will vs. a trust and how to pick the best option.

3. Beneficiary designations

A will or RLT does not cover all assets someone may have, like 401(k) accounts, pensions, and life insurance policies. These are called non-probate assets, meaning they skip the probate process and transfer directly to their designated beneficiary.

For assets that are not part of the probate process, an individual must contact the custodian that oversees each of their assets (for example, the insurance provider that manages their life insurance policy) and designate a beneficiary. It’s also important to keep these designations updated.

FreeWill’s online platform provides a resource to quickly and easily designate beneficiaries.

4. Durable financial power of attorney

A financial power of attorney (POA) makes important financial decisions on behalf of someone who can no longer do so. The person appointed as power of attorney is known as the “agent.” In a "durable" power of attorney, the agent can continue making decisions on behalf of someone even if they become incapacitated. This document is particularly important for anyone who has loved ones (like minor children or elderly parents) who rely on them to pay bills or manage a household.

FreeWill offers an online resource to create a durable power of attorney for free.

5. Living will or advance healthcare directive

A living will is a document that outlines an individual’s healthcare preferences in the event they can no longer communicate their wishes. It’s a way for someone to document medical treatments, medications, or procedures they do or don’t want.

When a living will is paired with a financial power of attorney, it’s often called an advance healthcare directive (AHCD). Having these two documents in place is a powerful way for people to gain peace of mind for themselves and their loved ones.

This online tool from FreeWill makes creating an AHCD simple and free.

What's next?

Busting myths and embracing the role of women in estate planning is not only a matter of empowerment but also a necessity for the financial stability, equality, and well-being of families and communities.

As we strive for a more inclusive and equitable society, recognizing and addressing women's unique challenges in estate planning is an essential step toward building a prosperous future for all. Thinking about finances is the number one cause of stress for women, but it doesn't have to be. The first step is as simple as taking 20 minutes to use FreeWill's free estate planning tool as an act of care for yourself and your loved ones.