What’s a Girl to Do? Financial Planning Considerations for Single Women

by | Dec 13, 2021

The Numbers

Life is full of surprises, changes, and adventures we often never dreamed would happen. These events are not always happy times but become part of the facts of our lives regardless. As women, for various reasons (death, divorce, choice) that often means we are eventually alone without a spouse. The US Census Bureau recently released an update confirming that nearly 50% of US adults are single. Pew Research Center further verifies that roughly half of women aged 65 and older are “unpartnered” and closer to 20-30% in younger age groups.

The “What Ifs”

As single women, we may not have had children or we had children/grandchildren or we may now have estranged children/grandchildren. Whatever your circumstance, being single forces you to think differently about the “what ifs” in life (What if I end up in the hospital? What if I get sick and die? What if I need care?) since there is no default spouse to rely on.

Doing Nothing

It is wise to acknowledge the facts around “what happens if I do nothing and don’t have these decisions in writing?” From a beneficiary standpoint, in the United States, we call that dying “intestate” (without a will) and whatever accounts you don’t have a beneficiary listed on will usually go through probate and then to family in an order like this: spouse, children, parents, siblings. So if you don’t have a spouse, your assets go to your children. If you don’t have children either, assets will go to parents unless they are deceased and then in that case it all gets split among your siblings (and so on down to nieces/nephews as needed). Is that how you want it?

From a health care standpoint, if you don’t have a Power of Attorney for Health Care designated, a court will appoint a guardian to take on that role. The same goes for a Power of Attorney for Finances (often called a Durable Power of Attorney) but that court appointment is called a conservatorship. Both can be very time, paperwork, and cost-intensive. This only adds to the stress of the situation.

Tough Decisions

So what’s a girl to do!?! Put your wishes in writing.  To put those Powers of Attorney in place, you need to decide who you want to make your medical decisions and who to take care of the finances. It is a tough decision. You may feel obligated to list certain people but be sure you feel comfortable that you not only trust them explicitly but also know that they would be good with the paperwork and responsibility of the role.

And for beneficiary designations, remember that who you name on an account, annuity contract, life insurance policy, etc. will override the will. Whoever is listed as a beneficiary on an asset, is who will receive that asset. Without a spouse, you can consider naming another close family member, or a friend, or a charity or more than one of those as you can designate beneficiaries in percentages. So you could name three girlfriends, or a special niece and a girlfriend, or two nephews and a charity as long as it adds up to 100%.

Best Practice

A best practice is to consider naming both a primary and a contingent beneficiary on everything. If you and the primary beneficiary, for example, were in a car accident together, whoever is named as the contingent beneficiary would then be the recipient of that account. Make it a point to review those designations annually to be sure they still reflect your current wishes. Capturing and updating a master list of who is named on what (My Net Worth Summary is one format) can be one way to do that annual review.

The Beneficiary Decision

Your personal or passionate connection with someone or a specific charity can help you with the beneficiary decision. Who do you share memories with? Is there an individual who has been important in your life? Is there someone you would like to help, or thank, or be remembered by? What organization(s) are involved with work that is meaningful to you or continues an area you are passionate about or you feel is a good cause that can help positively impact the world after you are gone?

Where to Name a Charity

If you are charitably inclined, naming a charity is best on a retirement account where the charity will receive the entire percentage you designate since they won’t owe any taxes on that distribution like a person would. So an IRA, employer retirement plan, or qualified annuity would be better for listing charities as beneficiaries than a life insurance policy (which is tax-free to any beneficiary) or a taxable account (usually tax-free to any beneficiary due to the step up in basis if the beneficiary sells it right away).

Work with an Estate Planning Attorney

Who you decide to name as beneficiaries is the hard part. But then it is best to discuss those decisions with your estate planning attorney. Are your wishes reflected accurately in the documents? Have you thought through the practical aspect of those decisions? Are your beneficiary designations listed correctly on each account? Do you need to clarify in your documents who you have intentionally disinherited?

The Stuff

Too often, I think we have all heard stories about families not getting along during and/or after an estate settling process. And so many times it has to do with the distribution of “the stuff” and not the money. Personal items, family heirlooms, jewelry, etc. can become a source of argument and discord in a hurry. Writing a Personal Property Disposition List can help if you have specific things you want to go to certain people. The more clarity you can provide, the better. Don’t just let them duke it out after you are gone, because they will and it usually isn’t pretty.

Choosing an Executor

Often the Successor Trustee or Personal Representative/Executor is left to decide those distribution questions when there is nothing specific in writing. So who you name in your will or trust in that role can also be an important selection. One option to be aware of is a Private Fiduciary or a Trust Company. They can be named in that capacity, even as Powers of Attorney, to remove the family from having to make decisions and are bound by law to follow your document wishes. They do charge a fee at the time they provide services but depending on the situation, that may still be a wise option. Or you could name a family member/friend jointly with the Fiduciary/Trust Company. Talk with your estate planning attorney about this. Having an outside, non-family, third party can prevent a friend/family member from serving as “the bad guy” in someone’s opinion.

One More Thought

One final thought that we all may want to consider at some point in our lives is the idea of “giving while we’re living.” Giving family/friends personal property items now vs later can help assure they get distributed according to your wishes and may provide some personal enjoyment to you and the recipient. The same is true of financial giving if your situation allows. Enjoying generosity while we are alive to see the recipients’ appreciation or met need, can be a win-win!

Marie Burns is a Certified Financial Planner, Speaker, and Author of the bestselling Financial Checklist books. Find Marie on Facebook or contact her at [email protected]

This article was first published at 60 and Me – a community that helps women over 60 live happy, healthy and financially secure lives.