A Woman's Guide to Wealth Preservation - Black Enterprise

A Woman’s Guide to Wealth Preservation

At 38 years old, Valerie Bonner stands to leave behind a sizable estate currently valued at more than $200,000. However, there is no legacy plan to pass on her riches. She has no children, so her 78-year-old mother is the beneficiary on her retirement accounts and one of her life insurance policies.

The East Windsor, New Jersey, employee benefits manager has invested in her company’s 401(k) program since she became eligible in 1990. Bonner also has multiple life insurance policies, including approximately $225,000 in life insurance, which includes a $100,000 whole life policy. The other policies are through her employer, which provide insurance up to her salary amount. She doubled that to make sure there’s enough money available to pay off her condo and other debts in the event of her death. In addition, Bonner contributes 10% of her annual income to retirement and savings accounts. However, she has no estate plan or will. “I’ve always said I’m going to do that when I turn 40,” says Bonner.

Pass Wealth Down, Not Up
Estate planning attorney Lori Anne Douglass, partner at Moses & Singer L.L.P. in New York City, warns against single women delaying this process. “If there is no legal document in place saying otherwise, then all assets of a single person with no children will go to that person’s biological parents in equal shares,” says Douglass. She further explains, “You don’t want money to travel up; you want it to travel down.”

Leaving wealth to parents without an estate plan in place has potentially serious implications because your parents will either have a greater tax burden on their personal estate due to the inheritance or become ineligible for certain senior assistance. To guard against these issues, singles looking to leave money to parents may want to consider a supplemental needs trust, which would insulate disabled seniors from losing any government assistance such as Medicaid. If parents are well-off, singles may want to consider an insurance trust to prohibit them from having to pay estate taxes on insurance payouts.