Single persons need a well-executed estate plan as much as married couples. In fact, for singles it could be said estate planning is more important. If you’re single and without a properly structured and executed estate plan, your assets could end up distributed contrary to your wishes and vital end-of-life decisions could be made by someone not of your choosing.
In short, if you’re single, you need to take the time to put an estate plan together. Here’s what you need to know.
WHAT HAPPENS IF YOU DON’T HAVE AN ESTATE PLAN
How bad is it if you’re single and don’t have an estate plan? Well, here’s two items to consider:
End-of-life decisions can be very hard to make. If you haven’t communicated your medical care preferences, such as regarding artificial respiration for example, the decision falls to your relations. Disagreement on what should be done or what your wishes are can leave you in limbo and strain relationships.
Dying without a will is known as dying intestate. It means your assets will be distributed according to the succession laws of your state. For single persons, assets are typically distributed equally to their closest relatives. If there are no living relatives, then the state may take possession of the assets.
ESTATE PLANNING BASICS FOR SINGLE PEOPLE
Setting up an estate takes a little time but isn’t hard. Perhaps of greater importance, it guarantees your medical care and asset distribution will be done per your will. For your estate plan, you will want to see that you have the following:
Medical Power of Attorney (POA)
This document designates your health care preferences and directives in case you are unable to express them yourself. The Medical POA authorizes an individual to make decisions on your treatment and care, so it’s important to choose someone you trust, but also someone who will respect your wishes and be able to handle the situational stress that may exist with end-of-life or life support decision-making.
Durable Power of Attorney
You will need this document to designate someone to manage your daily financial affairs if you become incapacitated.
You’ll probably start your estate planning by creating your will, the document that designates an executor for your estate, names guardians for children, and identifies how your assets are to be distributed upon your passing. Choosing an executor is important as the individual will need to work through the process of probate, divide your assets, and see that securities are transferred to beneficiaries.
Your financial assets, such as stocks, bank accounts and other investments, require beneficiary designations. It’s important to keep these up-to-date as they take precedence regarding distribution. Financial assets will be distributed to these beneficiaries upon your passing – even if your will indicates otherwise.
Now, it’s not essential to have a living trust, but having one is well worth consideration. The living trust transfers assets held by the trust to the designated beneficiaries without the need to go through a court-supervised probate process. It prevents probate as the trust continues to “live” even after you pass, so the assets never legally changed ownership upon your passing.
HOW TO SET UP A SOLID ESTATE PLAN
You can find a lot of online tools to setup an estate plan. To ensure all legal requirements are met—all those I’s dotted and T’s crossed—it is highly recommended to work with an attorney who specializes in estate planning.