As parents age, it becomes more crucial than ever to discuss estate planning with children.
Almost all families recognize this fact, with 97% acknowledging the importance of such conversations, according to Fidelity Investments’ recent Family & Finance study.
And yet, these conversations are not happening as often as they should. Nearly one-half of the families Fidelity surveyed admit they have not yet had this type of talk.
In a summary of Fidelity’s findings, Timothy Habbershon — managing director and founder of the Fidelity Center for Family Engagement — says:
“As people get older — especially past 70 — they often become less willing to talk about things like estate planning, long-term care, or how their family can be involved in planning and decision-making. But with trillions of dollars preparing to change hands, there are millions of families going through generational transitions.”
Today, American women are richer than ever before. In fact, by 2030, it’s projected that women will hold about two-thirds of all the private wealth in the U.S., according to a report by McKinsey.
The surging economic status of women is due to recent wage gains and a growing amount of inherited wealth, according to a Bank of America Institute report.
Fidelity says most women report having a financial plan in place. But the facts suggest something different. In fact, a large percentage of women lack the following key documents — including the most important one of all.
1. Will or estate plan
Just 30% of women have a will or estate plan, or both, Fidelity says. This might be the most important legal financial document.
As we have previously reported, a will can map out what happens to your valuables when you die. It also can determine who will serve as your executor and explain the funeral plans you would like to see carried out.
An estate plan usually includes a will but also contains other documents that map out what should happen to you and your assets should you die or become incapacitated.
Without a will or estate plan, you can leave behind unnecessary chaos as your family and the legal system try to determine what will happen to your estate.
For more on this important topic, check out “7 Things You Should Not Include in Your Will.”
2. Health care power of attorney
About one-quarter of women — 27% — have assigned a health care power of attorney, according to Fidelity. Taking this step allows you to name an individual who will make medical decisions on your behalf in the event that you cannot communicate such instructions.
Some people who assign a health care power of attorney do so instead of completing a living will, another document that helps to detail your preferences for medical treatment when you are too ill to do so. Others have both a health care power of attorney and a living will.
3. Financial power of attorney
Among women, just 24% have a financial power of attorney, according to Fidelity. A financial power of attorney allows you to name someone to make financial decisions on your behalf.
Without a power of attorney, your loved ones will likely have to go to court to have a guardian appointed to make financial decisions on your behalf when you are unable to do so. This can be a time-consuming and expensive process.
To learn more about protecting yourself and your loved ones, read “8 Essential Legal Documents to Create Before It’s Too Late.”
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