Planning Issues for Women

When Husband Handled the Finances

While women and men have many issues in common, some of these issues tend to affect women more deeply. For example, in the case of the death or disability of a spouse, it is more often the surviving wife who is unfamiliar with handling the family finances. In the course of planning for such a couple, it is wise to find a financial advisor that the wife can turn to. Ideally, this relationship should be developed over the years while the husband is living, so that there is a seamless transfer of decision-making. Where such a relationship with a financial advisor is absent, one of the financially savvy children may be named as a co-trustee with the surviving wife or, should none of the children be suitable for that role, the attorney as co-trustee may be considered.

 Children from Prior Marriages

With the increase in second marriages, many women have children from previous marriages. How will those children fare should a wife die first? This dynamic may be complicated by the fact that there are children from the second marriage as well as the first. Here, we consider making partial gifts to the children of the first marriage, who are generally older, on the wife’s death. The balance of the assets may be kept in trust for the surviving husband, providing for him during his lifetime and, on his death, paying out to the wife’s children from the second marriage. Alternatively, wife’s entire estate may be held in trust and pay out to all of her children in equal shares after the husband dies.

 In the second marriage context, what about the husband’s children from a prior marriage? If the wife is going to be financially dependent on some or all of his assets after his death, she may want to avoid the situation when one or more of the husband’s children are in charge of the money after he dies. Here, the pitfalls are many. They may not wish to distribute principal to her, feeling that the funds are coming out of their inheritance. She may find out that they do not care for her personally, even though this was not apparent when their father was alive. They may disapprove of her subsequent remarriage. We have recommended to many women clients that they choose the lawyer to act as co-trustee with her after a husband’s death. This way, the conflict of interest that the husband’s children have is eliminated and she may handle her personal and financial business privately with her own lawyer.

 Medicaid Issues for Women

Since women tend to live longer than men, they make up the majority of nursing home residents. Planning to protect assets, especially the family’s home, from being lost to the costs of long-term care, is essential. Medicaid Asset Protection Trusts (MAPT’s) should be into place when a husband dies. While the home was exempt from Medicaid when the spouse was living, it becomes an available resource, required to be “spent down” if a single person requires long-term care.

What if it is a second marriage and the couple has executed a pre-nuptial agreement? Many are surprised to learn that they are financially responsible for the cost of their husband’s care despite the prenuptial agreement. Medicaid is not bound by that agreement and considers the combined assets of the couple to be available for the care of the ill spouse, regardless of whose name those assets are in. Before contemplating a second marriage later in life, especially where the man is older, a woman should determine whether her intended has long-term care insurance or, if not, is willing and able to purchase that insurance so that her assets are protected. If he is unable or unwilling to purchase long-term care insurance, she should consider setting up a MAPT for herself to protect her assets.