Planning for Success October’s Edition: Single Individuals without children need an Estate Plan too!
More and more people are delaying, if not totally foregoing a life that involves marriage and parenting. For many young adults, staying single and childless is simply a matter of choice. Regardless of the reason, as more individuals opt for non-traditional lifestyles, the number of single childless households is likely to steadily increase in the coming years. Most do not take estate planning as seriously as they should. If you are single without any children, you may not think you need to worry about developing an estate plan, but the reality is that it can be more important for those individuals to have a proper estate plan in place.
If you are single, you face a myriad of potential estate planning complications that are not an issue for those who are married with children. Whether you are wealthy or have very limited assets, without proper estate planning, you are not only jeopardizing your wealth and property, but you are putting your life at risk too. Not to mention the potential conflict and expense you are leaving for your surviving family and friends to solve upon your incapacity or demise. They will be left without a set of instructions or action steps that need to be accomplished.
It is important to address the following inconvenient truths before deciding to forego estate planning:
Your Estate needs to be settled whether an appropriate party or individual is in place.
Whether you are wealthy, poor, or in the middle, in the event of your demise, everything you own will need to be located, managed, and passed on to someone, which can be an arduous undertaking even for families with a proper estate plan in effect. On average, American families spend over 600 hours and $15,000 in a year (2 years if probate is required) to finalize personal affairs and settle the estate. Without having a clear estate plan, including a will or trust, your assets will go through probate where a judge and state law will decide who receives your belongings. In the event family members or friends do not come forward, then your assets will become property of the state.
Why give the government everything you worked so hard to build? Even if you haven’t amassed a fortune, you undoubtedly have sentimental items that are near and dear to you. Perhaps, you have a pet/s that you would like to give to a close friend or family member. Who is going to safeguard and look after these items?
While it is uncommon to pass away without any family members stepping forward. It is far more likely that a distant relative will suddenly emerge to make a claim. Notably, without a will or trust, state intestacy laws establish dictate priority in claims. Traditionally, state intestacy laws follow a hierarchy that typically puts children first, then parents, followed by siblings, and then distant relatives like nephews, nieces, uncles, aunts, and cousins. While this could be fine for your family dynamic, it can be quite troubling when dealing with estranged siblings that have poor money management skills or are battling addictions. Ultimately, it is important to develop an estate plan that ensures your assets will pass to the proper parties.
Who will have power over your healthcare and ensure your standard of care is maintained?
It is a common misconception that estate planning is only used for transferring assets. The most critical aspects of estate planning have little to do with your assets, but are aimed at protecting you while you are still very much alive. Proactive planning allows you to name an individual of your choice to make healthcare decisions in the event of your incapacity. This can be easily achieved with an advance medical directive. For instance, if you are incapacitated due to a serious accident or illness and unable to give doctors permission to perform risky medical treatment, it would be left up to a judge to decide who gets to make this decision on your behalf. Furthermore, in the event of your hospitalization, your family members who have priority to make decisions for you could keep your closet friends away from your bedside. Family members that do not share your values about the kind of food you eat or the type of medical care you should receive could be the same individuals that are making the decisions about how you will be cared for. These issues can be easily addressed and implemented with the use of a living will. A living will allows for you to provide specific guidelines detailing exactly how you want your medical care to be managed during your incapacity, including critical end-of-life decisions. If you are single without any children, you need to develop an estate plan to identify healthcare decision makers and provide specific instructions on how you would like those decisions to be enforce in the event of your incapacity.
Who’s going to handle your day-to-day finances?
As with healthcare decisions, if you become incapacitated and have not legally identified an individual to handle your day-to-day finances while you are unable to do so, the court will pick someone for you. The best way to avoid this is by granting someone you trust with a durable financial power of attorney. A durable financial power of attorney is an estate planning tool that grants the individual you choose immediate authority to manage your financial, legal, and business affairs should you become incapacitated. This trusted individual will have a broad range of powers to handle various items like paying your bills and taxes, selling your home; as well as, managing your banking and investment accounts. Without a signed durable financial power of attorney, family and friends will have to go to court to get access to your finances, which will not only take time, but could lead to mismanagement of your finances. This can be completely avoided by simply listing a family member or friend. Notably, this individual will nearly have complete control over your finances while you remain incapacitated, the most important aspect is selecting someone who is trustworthy and has your best interest at heart.
Why leave so much to risk? These common estate planning issues can be easily avoided by simply utilizing these estate planning tools. As Benjamin Franklin so profoundly stated, “If you fail to plan you are planning to fail.” It is important to have a team of proven professionals to comprehensively review your financial situation and to provide you with a complete picture. This will allow us to discuss your goals and desires and ensure there are no potential roadblocks within your financial roadmap. We welcome the opportunity to review your portfolio, retirement plans and estate planning documents, this way we can make sure an effective solution is in place to achieve your goals and desires.