Estate planning for women

By Michelle Munro | May 1, 2010 | Last updated on September 21, 2023
6 min read

No one likes talking about estate planning. It’s fraught with emotion and can be uncomfortable—after all, it anticipates someone’s death. And women are traditionally even more reticent on the topic than men, preferring to leave the unpleasant details to a spouse or partner.

But this is changing, fast. Estate planning is more complex than ever, and the role of women is one element of that evolution. Women are gaining strength as economic players, either as partners or on their own, making it all the more imperative that they actively plan for their financial destinies. Financial planners should consider the estate planning needs of all clients, but these days, female clients may need extra attention.

Tradition and change Most advisors are familiar with the traditional estate planning scenario: a breadwinner husband dies, leaving his estate to his wife. When she passes, the estate is divided among any children. Generally, the plan isn’t complicated, unless the inheritors have to address the details that surface when such assets as family businesses or cottages are sold. The problem, as most advisors know, is simply to get clients to address the basic issues.

Mortality rates suggest this scenario will remain fairly common. While men have closed the longevity gap with women slightly in the past decade, Statistics Canada estimates that women, on average, will still outlive men by more than three years.

But changes in both family and personal relationships are making estate planning more complicated. For example, one can no longer assume that men are the chief breadwinners. A 2008 Statistics Canada survey reported women were either equal or primary breadwinners in 42% of dual-income households, up from 37% 10 years previously. Other studies underline the financial gains women are making relative to men. For several years now, women’s participation rates in most forms of post-secondary education have remained higher than those for men. This trend will reinforce the growth of women’s earning power relative to men.

Changing lifestyles, evolving plans In recent years, women have shown more flexibility in the ways they build their personal and financial lives. Many women form relationships and begin to raise children earlier than men—thus delaying their potential earning capacity. But a significant number of women are using their educations to build careers and earnings, delaying childrearing until well into their 30s and 40s. Given such trends, women will ultimately face important estate planning issues.

Our notion of family is also being redefined. It’s common for same-sex partners to adopt children and take on the responsibilities—including financial and estate planning—inherent in traditional heterosexual relationships. Traditional families, meanwhile, have added the financial complexities that might stem from separation and divorce. Statistics Canada estimates that one of every nine married Canadians has been married more than once. Children from previous marriages commingle, creating new allegiances for new partners. Financial assets from previous relationships enter the mix as well.

Divorce and remarriage cast their shadows over estate planning in unforeseen ways. For example, they may require additional insurance policies to ensure that alimony payments will be honoured when former spouses die.

Given their growing economic power, women need to understand estate planning issues. They must be in a position to either share control or take control of a family’s estate plan. All the issues that apply to men—from dispersing assets in accordance with a person’s wishes to custodial questions, including the future care of minor children—apply equally to women.

Your role as an advisor is critical in crafting effective estate plans, and you can start by making women clients aware of the basic elements in a successful plan. Then you can help them work alone or with a partner to construct a plan that will truly reflect their desires. The ideal is to avoid financial hardship while minimizing income taxes and probate fees. Over time, it must also reflect the changing priorities and wishes of both partners.

What follows is a discussion of the basic building blocks in any estate plan, a last will and testament and powers of attorney, with a special emphasis on the needs of women.

Estate planning … for women A last will and testament is the essential foundation of any estate plan. As your female clients accumulate greater financial assets on their own and through inheritance, it makes sense that they become thoroughly familiar with the basic elements and objectives of well-designed wills.

A will is about guiding the distribution of assets after a person’s death, and the basic elements are consistent. A will names the executor(s), the person (or people) responsible for settling the estate. It also identifies beneficiaries and records how each will share in the estate, whether they are children, charities, friends or relatives.

Older women with significant incomes and relatively young children will appreciate other important aspects of wills, starting with tax savings and deferral strategies. Equally, a will can designate a guardian or guardians of underage children in the event of a client’s death.

Staying current People may have multiple marriages and relationships over the course of their lives. Wills should evolve with these changing personal circumstances to reflect new connections, the acquisition and disposal of assets, and the birth and passing of children and relatives. All wills should be updated periodically, with particular attention to the following:

  • A clause protecting beneficiaries’ inheritances from being included in any future family property division resulting from a marriage breakdown;
  • A “disaster provision” specifying how an estate should be settled if both spouses die together;
  • A 30-day survival clause, so if spouses die within 30 days of each other, the estate will not be probated twice; and
  • A personal effects clause that distributes personal property according to a memorandum attached to the will. Such a memorandum is not legally binding, but it would provide guidance about the deceased’s specific wishes.

The checklist

A valid will All clients and their partners should understand why they need a valid will, one that’s been signed and witnessed by two independent parties. They should also make sure the will is easily accessible if they pass away. Without a will, a person dies intestate. Such estates are covered under provincial or territorial legislation, with government appointees administering the assets and deciding how they will be distributed among heirs. If there are no surviving family members, the assets of someone who dies intestate revert to the government.

Power of attorney Along with wills, powers of attorney for financial and personal care are essential estate planning documents. In both cases, the arrangements provide for a person’s incapacity prior to death.

Property Women of property, like men, need one or more relatives or friends to act on their behalf in financial matters should they become physically or mentally incapacitated. This is a legal document that may designate one person as primary power of attorney for property with one or more substitutes. It may also divide financial responsibilities. Either way, the person making the power of attorney can limit the decision-making authority of the persons named and the circumstances under which they can use that authority.

A valid power of attorney for property is important. Your female clients will not only want one for themselves, but should be named in their partners’ powers of attorney for property. Without such powers, they or other family members will have to apply to provincial or territorial courts to gain control of their incapacitated relatives’ finances.

Personal care Again, this is a legal document, although it delegates decisions about personal care in the event of incapacity. This includes major health care and medical treatment issues (including medical procedures, medication, admission to care facilities and personal assistance services) as well as nutrition, shelter, hygiene, overall safety and even clothing.

Women clients also need to look at powers of attorney for personal care from two perspectives. Given their relatively greater longevity, there’s more likelihood women will end up being caregivers to their partners, so arrangements here are important, especially since the alternative to a valid power of attorney is intervention by a government appointee. Longevity also dictates that women have effective power of attorney arrangements for themselves, specifying children, relatives or trusted friends to carry out their wishes.

Renewing the message All clients can benefit from your estate planning expertise. But women may require extra attention because of their unique and growing financial stature. Your efforts here can only expand and strengthen your advisory relationships—adding a positive element to what is often regarded as one of the gloomiest financial planning topics.

Michelle Munro

Michelle Munro is director, tax planning, for Fidelity Investments Canada ULC.