As a divorced woman, you may have unique estate planning needs. Here’s why

If you're a divorced woman, you may have unique estate planning needs. Find out why and learn three helpful tips for protecting your financial future and legacy.

Estate planning is crucial for everyone, but as a divorced woman, you may have some unique considerations.

Additionally, after divorce, your financial situation may shift considerably, potentially necessitating an urgent review or restructuring of your estate plan.

Failing to do so could mean that your assets are not passed on in line with your wishes, which could mean that your new partner or dependants aren’t provided for. 

Read on to find out why, as a divorced woman, you may need to take a different approach to estate planning, and discover three helpful tips for protecting your financial legacy.

Divorce may create an urgent need to review or update your estate plan

Crafting an up-to-date estate plan should be a top priority if you’re a newly divorced woman – whether you have a plan that you created during your marriage, or you’re considering creating one for the first time.

Procrastinating or avoiding this step could mean that your assets pass to unintended recipients.

For example, if you do not update your will after your divorce, your ex-spouse or civil partner might inherit wealth you did not wish them to have. Equally, your new partner and any children you have with them might not be provided for.

What’s more, not having your financial affairs in order at the time of your death could lead to complications and distress for your loved ones. A recent report by the Guardian (24 February 2024) has revealed that there were a record number of inheritance disputes in England and Wales in 2021/22.

Careful estate planning after your divorce could reduce the risk of such complications arising.

Longer life expectancies could make estate planning more complex for women

Life expectancies today are higher on average for both men and women, compared to previous generations. Yet, in general, women live longer than their male counterparts.

According to the Office for National Statistics (ONS; 30 January 2024) life expectancy calculator, a 45-year-old man has an average life expectancy of 84 years, whereas a 45-year-old woman may expect to live until the age of 87.

While living longer may seem like an advantage, it could also make estate planning more complex.

Research by the UK Parliament (2 October 2024) reveals that the prevalence of disability rises with age. In 2022/23, 23% of working-age adults and 45% of adults over State Pension Age were living with a disability, compared to 67% of those aged 85 and over.

So, as a woman, you may need to plan carefully to account for the healthcare-related expenses of a longer life if you want to leave a meaningful legacy for your loved ones.

Women may have substantial wealth to pass on, but they might be reluctant to seek financial advice

Women are likely to be key players in the upcoming generational wealth transfer. Research published by Forbes (12 November 2024) has revealed that women are expected to control more than 60% of the world’s assets by 2030.

Yet, despite their growing wealth, many women feel underconfident when it comes to planning their finances. The 2024 Schroders Women and Wealth Report found that only 17% of women feel very confident about achieving their long-term financial goals, compared to 29% of men.

However, women may also be less likely to seek financial advice when planning how to leave their wealth to loved ones. According to Fidelity International research published by IFA Magazine (5 October 2021) , 53% of women intend to leave an inheritance, but more than half of these have made no financial plan for doing so.

This could leave your family at risk of paying more Inheritance Tax (IHT) than they need to, which could diminish the legacy they leave for their loved ones.

Indeed, women hold more wealth than men when it comes to estates that are liable for IHT. The most recent figures from gov.uk (31 July 2024) show that in the 2021/22 tax year, female-owned estates had an overall IHT liability of £3.07 billion, compared to £2.93 billion for male-owned estates.

So, as a divorced woman, careful estate planning is essential if you want to preserve your assets for your dependants, while also ensuring that you have sufficient wealth for a comfortable lifestyle.

3 useful tips for protecting your financial future after divorce

Fortunately, there are steps you can take to address the unique estate planning challenges you may face as a divorced woman. Here are three to consider.

1. Update your will as soon as your divorce is final

Updating or creating a will as soon as you receive your decree absolute puts you in control of your financial future and ensures that your dependants are provided for.

You might want to consider amending:

• Your executor
• The named beneficiaries
• The guardian for your children.

If you have a new partner, you may want to include them in your new will.

Remember that a divorce does not automatically revoke your will, so this is an important step in your post-divorce financial planning.

2. Create a new Lasting Power of Attorney

If you appointed your former spouse as your attorney on your Lasting Power(s) of Attorney (LPA), their appointment is cancelled after your divorce is finalised.

Creating a new LPA could give you the peace of mind that your wishes will be followed, whatever happens in the future. It allows a trusted individual or individuals, named by you, to take control of certain decisions, either if you lose mental capacity or if you ask them to.

There are two types of LPA in the UK:

• Health and welfare – This covers decisions about health and personal welfare, such as living arrangements and medical care. A health and welfare LPA only kicks in if you lose mental capacity.
• Property and financial affairs – This gives your chosen attorney the legal authority to make decisions about your money and property. You can pass them this responsibility at any time, even if you have full mental capacity.

Putting both of these in place could make it easier for your loved ones to make decisions if the time comes.

3. Seek financial advice and regularly review your estate plan

Women may be less confident about managing their finances than men, as discussed above. If you’ve recently gone through a divorce, you might be feeling especially vulnerable and overwhelmed.

As an empathetic, female financial planner who specialises in divorce, I understand the unique estate planning considerations and challenges you may face.

I can help you create a financial plan that meets your specific needs, including factoring in later-life care costs and ensuring that your wealth is passed on as tax-efficiently as possible.

The tailored guidance I offer could provide the vital support and confidence-building you need to plan effectively for the future.

What’s more, I believe in building long-term relationships with my clients. This means that I’ll be there to help you review and adjust your plans if your circumstances change.

If you’d like to find out more about how I can help you with all your estate planning needs, please get in touch by emailing lottie@truefinancialdesign.co.uk or calling 07824 554288.

Please note

This article is for general information only and does not constitute advice. The information is aimed at retail clients only.

Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

The Financial Conduct Authority does not regulate estate planning, tax planning, trusts, Lasting Powers of Attorney, or will writing.