Every woman needs to balance her financial past with her financial future
Traditionally, women have been the caretakers of both the
older and younger generations of their families. But
providing care for family members is becoming
increasingly difficult, as doing so may require a leave of
absence from work and drain one’s bank account.
Such income disruptions greatly affect a woman’s ability
to save money, plan for retirement, and maintain financial
security. In addition, older married women often provide
care for their elderly husbands.
But who will help you when you require assistance? Even
though younger family members may be more than willing
to help, the costs of health care often exceed the amount
of disposable income available to the average family.
Perhaps, women and their family members need to look
toward the future and start the planning process.
Your Planning Process
Every woman needs to balance her financial past with her
financial future. By addressing the management of your
personal finances as soon as possible, you can avoid
disputes and build financial independence.
Here are a few things to think about as you start your
financial planning process:
Durable Power of Attorney. This mechanism allows
individuals to appoint a trusted relative or friend as a
representative in legal and financial matters. The powers
granted may be limited or broad in scope, and may vary
from state to state. They remain in effect during disability
or incompetence – although, in the event of
incompetence, a guardian or conservator could revoke
them. Some financial institutions are reluctant to
recognize a durable power of attorney, so it is worthwhile
to explore any potential problems beforehand.
Revocable and Irrevocable Trusts. A revocable trust
allows you to retain control of your property, while
delegating the responsibility for daily management to
others. This arrangement gives you the flexibility to
change the trust in any way, and at any time, as needs
and circumstances dictate. As added protection, a
revocable trust may remain unfunded as long as you are
legally competent. On the other hand, when you reach a
certain age and are willing to relinquish ownership of
assets altogether, you may wish to consider establishing
an irrevocable trust.
Informal Arrangements. You can also informally transfer
property to your heirs, in many cases free of gift taxes, in
exchange for being taken care of for the rest of your life.
This arrangement, however, should be approached with
extreme caution. Even with the best of intentions, it is
possible that adult children could deplete assets through
poor management, divorce, or creditor claims. Once the
assets are gone, an aging parent could become
dependent on the goodwill and financial circumstances of
family members.
Review Your Plans Periodically
It may be necessary to periodically review these
arrangements, as needs and circumstances change. You
may also wish to consider consulting a qualified financial
professional with experience in concerns facing today’s
women.