Unique Estate & Financial Challenges for Women

Estate Planning Challenges for Women

     The law says every adult American, male and female, must make his or her own personal, health care and financial decisions. But what if an injury or illness left you physically or mentally incapacitated? Who would make the important decisions for you? Would you rather your decisions be made by someone you have appointed through appropriate legal documents or by someone appointed for you by a probate court? The choice is yours, but proper estate planning can mean less expense, more convenience and greater privacy for you and your loved ones.
     Regardless of whether you are married or single, if you have minor children, have you executed appropriate legal documents concerning their care should they become orphans? Who have you named as the back-up parents, or guardians, to provide a safe and secure home for them, as well as help develop their moral character? Who will manage their inheritance and protect it for them and from them? Notes written no a napkin at the airport don't count. You can name guardians, and even financial fiduciaries, in your legal will. The failure to address these issues could negatively affect your children well into adulthood.
     Even if you have no children, you likely have definite ideas about who should inherit (and who should not inherit) your assets. In the absence of appropriate legal documents (such as a last will and testament and/or revocable living trust) containing your instructions, state law will control. In most instances, these laws would distribute estate assets to your surviving next-of-kin, which may differ from your wishes.

Financial Challenges for Women

     Are you working with a financial advisor who is focused on your financial security? Or are you working with a financial salesperson who is focused on their financial security? Studies confirm that you are more likely to reach your financial goals if you are working with a competent financial advisor.
     When it comes to investing your money, there are two fundamental concepts every woman should know: risk & reward and asset allocation.
     Whenever you invest your money in an asset, there is a very real risk that you will be disappointed in its performance. The risk that you will be disappointed in a given asset type is known as its investment risk.
     Naturally, for the risk you assume when investing in a given asset type, you expect a reward, or a return on your investment. In fact, at some future point you probably expect both the return of your money and the return on it.
     The key, therefore, is to balance the potential risk & reward for your overall investments according to your personal risk tolerance. It is critical that your risk tolerance is reflected in the allocation of your assets.
     An appropriate definition of asset allocation can be summed up as follows: Don’t put your eggs in one basket. Simply put, asset allocation is an investment strategy that seeks to balance risk & reward by spreading the investment of your money over a number of assets types. Furthermore, your unique approach to asset allocation will vary based on a variety of factors, including your investment goals (accumulation versus current income), your time horizon (college funding versus retirement), your need for liquidity (the ability to readily turn the investment into cash), your risk tolerance (are you more interested in the return of your money versus the return on your money?), your tax status (the impact of an investment on your tax burden), and current, as well as forecasted economic conditions (how optimistic or pessimistic are you about the present and future of inflation, interest rates and the overall economy?).
     A financial advisor can help you determine your risk tolerance based on factors such as those listed above, and design a basket (portfolio) of eggs (investments) that is most appropriate for you. Then, over time, your financial advisor will help you adjust the basket of eggs as your circumstances change.

Final Thoughts

     In the process of nurturing and caring for her loved ones, every woman should take time to make sure she has addressed her fundamental Estate Planning and Financial needs. This article has been a brief, general introduction to rather complex subjects. Competent professional advice should be sought.