Single? You still need an estate plan
Do any of these scenarios sound familiar? Tim, a single executive with a social media company, was too busy in his new career to bother about an estate plan. That’s for married folks, he’d said. Gwen, a flight attendant who is single and thinking about retiring, laughs when she hears people talk about estate planning. Who’s rich enough for an estate? Henry, who has lived with his partner Todd for years, never thought about what would happen to Todd financially after Henry’s death. All three of these singles are going on faulty assumptions about who needs to plan for their estate. They are like so many individuals who believe estate planning is for married people, the elderly and/or those with significant wealth. They are misguided. The truth is, singles need to plan for their estates just as much as married couples do. What is estate planning? “Estate planning is the process of anticipating and arranging for the disposal of an estate. Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses,” according to Wikipedia. First, keep in mind that if you have not made appropriate arrangements for your estate, state law controls your assets. And, while having a will is important, there are other safeguards and legal instruments that will help you avoid having the courts appoint a guardian who will make financial and personal decisions in your name if needed. The big three cornerstones of estate planning Married or single, don’t downplay the need for revocable living trusts, durable powers of attorney and living wills. Revocable living trusts These documents are created as vehicles to hold and own your assets, managing, investing and spending them as you see fit while you are living. Upon your death, the named Successor Trustee will take over your finances and pay your final bills, debts, and taxes as well as distribute your assets to the beneficiaries you selected without the need to go through probate. Probate is avoided because the assets in the trust are owned by the Trustee. In addition, if you become mentally incompetent and can no longer properly serve as your own Trustee, a successor called a Disability Trustee is appointed. This person will take over and manage your finances. Instructions related to the individuals who will receive your estate after the bills have been paid are spelled out in the trust agreement. Powers of attorney. During an illness or disability, you may be unable to manage your finances or make decisions about your property. The Power of Attorney gives one person who you name the legal ability to make decisions for you. Having powers of attorney is particularly helpful for unmarried partners or friends who usually are not allowed to make medical and financial decisions for each other without signed authorization You may name separate durable powers of attorney to make decisions on your finances and your health. Living wills. A health care declaration, more commonly known as a living will, is a legal document to let your wishes regarding life-prolonging medical treatments be known. In some states, individuals may combine a living will with a durable power of attorney to create a comprehensive advance health care directive.
Last but not least, remember that your beneficiary designations must be up to date. You will want your named beneficiary on your living will or living trust to match those on your life insurance policies and investment accounts. The beneficiaries named on life insurance and investment accounts take precedence over those named on your will. Be sure to review and update these documents regularly.