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Finances: It’s all in the details

January 1, 2016 by Sharon Pryse

Through the years I have spoken to a number of different groups. I remember distinctly however speaking to a group of women in their twenties and thirties over twenty years ago.  Most, mistakenly, agreed that they were not very good at money or business. In fact, many them did not like math or numbers. However, during the course of the conversation, a number of facts presented themselves. Most of the young women were the primary caregivers in their families, did the majority of the grocery shopping and purchases in general. So these women started to realize that they were logistic managers, great budgeters, nutritionists, and really understood more about management in business than they realized. Now, thirty years later these same young women are those that will be inheriting unprecedented wealth in the next few decades.

Women will inherit approximately 70% of the money that gets passed down over the next two generations. Many female baby boomers will receive two or more inheritances. One inheritance will likely come from their spouse. Women live on average five years longer than men and since many women tend to marry older men, these women will live ten or more years longer. The average age that a woman becomes a widow is 57 and 75% of married women become widows. Another inheritance could come from their parents or in-laws.

Why is this information so important?

Since women are living longer, their wealth has to last them for many years. Women need to be prepared as they get ready to inherit trillions of dollars over the next forty years. Inheriting wealth can be an overwhelming and emotional time in people’s lives. There are things that can be done now to be better prepared when that time comes. I was widowed in 1998 and personally understand the uncertainty that comes with the grief. Luckily and largely because of my chosen career, I knew about our finances, but it is something that everyone should become more familiar with – if you aren’t already.

First is get organized with your family’s financial details. Be sure you know where account details are located, how to access updates and who to contact for changes.

Second, make sure you know the how and/or why behind various accounts or investments. Is one account for short-term cash needs and another account for long-term future investments?  Is one account protected from income taxes like an IRA account or perhaps even a Roth IRA account?  The investment strategies often vary by type of account.

Third, make sure you understand how your assets are titled. If something happens to one person, accounts or property that is in joint name will pass to the other title holder. Your Will only controls those things that are just in an individual names. Beneficiary designation forms normally control life insurance, annuities and retirement plans instead of the Will controlling those items.

Fourth, review your plans and investments at least annually. There are so many changes with tax code, our love ones and life in general, that meeting with your financial advisor once a year helps to keep everything in check.  People often forget to update their advisor on even major life changes, but a meeting brings everyone up to speed.

Inheritance comes with a myriad of complications and emotions. The preparation you do now will alleviate some of the stress at the time it occurs. This will allow you to appreciate the love and consideration that someone has passed along to you.

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