global Tax Estate Planning Isn’t Just for Married Couples with Kids August 28, 2023 While it may seem counterintuitive, estate planning can be even more important for a single person without children than for married couples. Here’s what you need to know. The law makes certain assumptions for married couples about who should inherit their property if they die and who should make financial or medical decisions on their behalf if they become incapacitated. The estate process (without a plan) of a single person without kids is more likely to result in undesirable outcomes than married couples. Two risks in particular make estate planning essential for such individuals. 1. The Wrong People Could Benefit Dying without naming beneficiaries in a will or trust guarantees your estate will have to go through the probate court — a process that can take six months or longer. The court will apply state intestate law to determine who receives your property, which could result in individuals you wish to exclude receiving distributions from your estate. Intestate laws generally distribute the estate of a decedent with no spouse or children to parents and siblings, although the order varies by state. If no parents or siblings are alive, an estate could go to grandparents, nieces and nephews, aunts and uncles, and other “next of kin.” And, if no next of kin can be located, the estate will end up in the hands of the state. Probate also will be triggered if a will exists. The court will authenticate the will and officially appoint the executor named in the will to distribute the estate assets according to your wishes. Trusts can bypass the probate process. For single individuals without children, a revocable living trust is usually the best choice. Assets are transferred to the trust until distribution. Typically, you serve as the trustee while alive and designate a successor trustee to distribute the assets after death. Whether for a will or trust, beneficiary selection can require more time and thought for singles without kids than for married parents. It’s generally an easy decision for the latter to leave their assets to their spouses, children and/or grandchildren. Those without such obvious beneficiaries may struggle to choose among other family members, friends, charities and even pets. 2. The Wrong People Could Be in Charge Estate planning isn’t only about distributing your assets after you die. Another component is planning in case an injury or illness leaves you unable to make critical decisions for yourself. While you’re still healthy, you should formally designate a trusted individual to make vital, potentially life-changing decisions related to your finances and medical care. For medical decisions, your estate plan should include: An advanced healthcare directive (for example, a living will),A power of attorney document, andA HIPAA waiver authorizing access to your medical information. You also should complete a durable power of attorney form authorizing an individual to manage your financial affairs. Without such documents, courts generally will turn to your next of kin or appoint a third party to serve as a guardian or conservator. If you have a partner, that individual could be left out of decisions by family members who could potentially make choices contrary to your values and preferences, about medical care and even visiting privileges at a hospital. Moreover, court intervention can consume significant time and money. Act Now The idea of estate planning may seem daunting and, for singles without children, even unnecessary. But opting out can jeopardize your health, as well as the management and distribution of your assets. Similarly, it’s important to regularly review your beneficiaries and powers of attorney to ensure they continue to reflect your changing circumstances and preferences. For more information, contact us.
