When a person dies without a last will and testament, assets are disbursed according the laws of the state. For married people, that means a surviving spouse inherits those assets, even if they're not jointly titled. For a single person, the same law means the assets will be handed off to close relatives (i.e. children, parents, siblings). And, when no relatives are available to inherit the estate, client's assets might even go to the state.
Let's keep the state out of it, shall we?
The best way to keep the government from choosing the fate of a single client's assets is to ensure he or she has the following essential documents in an estate plan drafted by an experienced attorney.
The primary piece of the estate plan should always be a will. Single people may have special considerations to keep in mind while creating this document.
• Who does he want to be the executor if he doesn't have (or want) any relatives to assume the task? A client could choose a close friend or an objective third party. Also, naming beneficiaries for a single person may not be as obvious as it is for married people, particularly if there are no children or close relatives.
• Who will inherit items with sentimental value?
• Who will care for a beloved pet?
• Is there a charity a single client would like to support with donations of his assets or the liquidation of his estate?
Durable Financial Power of Attorney
If a client is incapacitated due to illness or injury, who can legally make financial decisions on his behalf? Married people generally name their spouses as durable financial power of attorney to manage their money issues. The choice is not as obvious for a single client. In our experience, most of our single clients choose a trusted friend or a close relative to handle financial affairs while they are unable to do so.
Healthcare Power of Attorney
At the same time, who speaks for a single client during a medical crisis? Who is authorized to discuss with doctors and make decisions about treatment and care? This person does not have to be the same one named as a client's financial power of attorney. The role of health care power of attorney should be filled by someone who will act according to a client's expressed wishes regarding medical decisions.
Single clients should ensure that life insurance and retirement plan beneficiary designations are updated regularly to reflect life changes. Our suggestion is that these designations should align with a client's beneficiary designations in the will to avoid confusion for loved ones.
There are several instances in which a single client is much better off to place his assets into a revocable living trust than to rely on a simple will. A well-drafted trust is designed to ensure those assets distributed according to a clients' wishes without a probate a client's involvement. In many cases, creating a trust will be far less expensive than what the estate will lose to probate costs (i.e. court filings and attorney fees).
A trust can also help a single client who wants to ensure a pet is properly cared for after his death, that a disabled loved one continues to receive financial support, or that a cause or charity he cared about in life will continue to benefit from the legacy he leaves behind. The protective powers of a trust are critical for business owners and professionals that want to ensure that what they worked so hard to achieve doesn't simply dissolve upon death.
Don't Ignore It
In the end, we know estate planning can seem like a daunting task for our clients, especially the unmarried ones. Many ignore the problem, accounting for a large number of single people who don't even have a simple will. They have special considerations that need to be addressed and many don't have relatives to help manage things. Therefore, our single clients are often in greater need of sound planning advice.
To learn more about common estate planning issues, check out our free guide, Estate Planning Pitfalls: The 12 Most Common Threats to Your Estate & Your Family's Future, or to discuss your estate planning concerns, please call our office at 919-443-3035 or use our contact form.