While the single lifestyle is usually thought of as carefree when compared to married life, when it comes to estate planning a single person’s decisions and plan may prove more complicated than for a married couple. Whether you have never been married, are divorced or have outlived your partner, estate planning is vitally important to ensure that your wishes are carried out.
If a married person dies without a will, typically all the assets are held jointly so the estate passes directly to the surviving spouse. However, if singles die without a will or other estate planning documents, real estate and bank accounts are typically held only in the single person’s name. If a single person dies without a will, or “intestate”, these assets pass under the Rules of Intestacy. This means the state decides who inherits the assets, not you. For most states, if a single person dies without a spouse or children the intestate estate passes to the person’s parents or, if there are no living parent, a more distant relative. Friends and long time partners are ignored. In addition, married couples have the ability to leave their property to their spouse free of estate tax, no matter the value. Single people of most states, however, do not have this option. Without a proper estate plan a single person’s estate can be hammered with avoidable taxes.
Singles who are still living but have become incapacitated could run into even more issues. The fate of their medical care and estate could fall into the hands of a distant relative or stranger appointed by the state as their guardian. Many people have an unmarried partner, trusted friend or charity to whom they wish to pass on their property or assist them with medical decisions, desires that cannot be honored without the proper estate planning documents.
The first option to remedy the above situations is to create a will or, if appropriate, a Revocable Living Trust. These documents, when used together, provide specific instructions on how you would like your assets distributed after you die. By allowing a trustee to distribute your assets to your beneficiaries, probate can be avoided, which is an often times costly public court proceeding. Naming someone familiar with your goals as a Trust Protector can also help to ensure your wishes are followed. A Trust Protector can be given the authority to remove and replace a trustee that is not following your wishes, an emotional as well as monetary benefit.
Having your estate planning attorney assist with updating your beneficiary designations is also an important part of safeguarding your estate. No matter what your will or trust says the people named on your beneficiary designations will inherit those assets. Without making the necessary updates, an ex-spouse or former friend could stand to inherit your life insurance policy or investment account.
Durable General Powers of Attorney and Medical Powers of Attorney/Living Wills also play a major role for singles. Usually, unmarried partners or friends aren’t able to make medical and financial decisions for each other without the proper authorization. Having a power of attorney drafted and signed allows any person you choose as your agent to manage your assets should you become incapacitated. A living will allows you to choose a health care agent who can make medical decisions for you if you become too ill to do so yourself. By placing an agent of your choosing in these important roles, you can ensure that the person who knows you best is making medical and financial decisions that will benefit you and your estate.
Often times, estate planning is associated mainly with the traditional American family; spouses and children. However, it is important for attorneys and their clients to keep in mind that no matter the family situation, whether considered “traditional” or “untraditional”, ensuring that the decisions about your property and health fall into the hands of people who know you best is extremely important.
If you have further questions about estate planning for single persons, feel free to contact me for a free consultation. Wills, Trusts and Estates, It’s All We Do!