All The Single Ladies… Estate Planning Tips for Singles with No Kids
Do an image search for “estate planning” and you’ll likely see lots of pictures of couples, some young, some older, many with kids. But singles – many without kids – have specific estate planning needs that shouldn’t be ignored.
Just because you don’t have a spouse or kids doesn’t mean you don’t have plans for your assets. In fact, you may have very specific desires for divvying up your assets, and beneficiary designation forms may not be enough to ensure that your assets go where you want them to. You may also want certain stipulations about how the money is managed and distributed. And of course, you want to be sure that you – and your assets – are protected should you become incapacitated or sick.
So what are the top things single people should do today to ensure they are prepared with a solid estate plan? And how soon should you get started? (Hint – immediately would be a good time to start…)
Execute a Power of Attorney and a Health Care Proxy
These important documents are designed to protect you and your assets while you are still alive. They allow you to designate a trusted person to make important financial and medical decisions for you if you cannot make them for yourself.
Singles need to plan ahead. If you become sick or incapacitated and someone needs to step up to make financial or medical decisions, a number of people might think they are entitled to make these decisions – your parents, your siblings, your best friend. With a durable power of attorney and healthcare proxy, you get to decide, and help your loved ones avoid potential fights and lawsuits later on.
Yes, You Need a Will
Estate planning for a single person isn’t necessarily that different than it is for married individuals. Generally it makes sense for any adult to have a will, and for single people. For singles, this might be even more important if you want to ensure your assets are distributed the way you want.
Your state’s intestacy laws come into play if you die without a will. These are the laws that determine who inherits your assets, and what share they receive, if you die intestate (without a will). In Massachusetts, the assets of a person who dies intestate and without a spouse would pass to their descendants first. If there are no descendants, the estate would instead pass to the person’s surviving parent/s. If there are no surviving parents, assets would pass to the parents’ descendants.
If you have close friends, or the child of close friends, to whom you feel closer than your biological family, a will ensures that they get the assets you have designated for them. Making a will is important if you want to pass your assets to the people who matter most to you, not just those who are the most closely related to you.
You Need a Trust, Too!
Creating a trust along with your will allows you to record your wishes regarding what happens to your assets when you die. Unlike a will, a trust doesn’t have to be filed with the probate court – this not only helps avoid probate, but also protects your privacy and that of your beneficiaries.
Avoiding probate is reason enough, though, and why we suggest most people use trusts as part of their estate plan. With a trust, the person who is named trustee can automatically access and distribute assets. There’s no months-long delay while the personal representative waits for the court’s sign-off, like with probate.
Some people use joint tenancy to try and avoid probate – but this can backfire. Giving your beneficiary joint ownership of your home, for example, can both cause tax problems, and might result in your wishes not being honored, if you instruct the beneficiary to sell the house after your death and distribute the proceeds and they choose not to do so. There’s nothing compelling them to if they are a joint owner.
By contrast, creating a trust does allow singles to set specific terms that determine how their assets are managed. That’s especially useful if any of your beneficiaries are minors. You can name an age at which the children receive assets, or create a schedule dictating that they get set amounts at different ages or when they meet certain milestones. The trustee you name will manage your assets and make sure that minors are provided for, if necessary.
Remember, trusts aren’t just for the wealthy – they are an important part of anyone’s estate plan.
Failure to Plan is the Biggest Mistake
Undertaking an estate plan may seem daunting, but the biggest mistake you can make is avoiding it. A qualified estate planning attorney can help you think of key issues, and plan ahead so your estate plan reflects your wishes and ideals. Contact our office today to schedule an appointment to discuss your options.