Spiro J. Verras Blog

Tuesday, November 15, 2016

A Childless Single's Guide to Estate Planning

What basic estate planning documents should single people with no children have in place?

While many of our estate planning clients are married couples or single people with children, It is also important that single people without children create an estate plan. Of course the concerns and needs of childless singles differ, but it is just as vital for them to have a comprehensive plan to protect themselves and their assets. Unmarried people don't have spouses who can usually step in to manage the affairs of an incapacitated married person, and childless people don't have descendants to serve as their "natural heirs." Consequently, it is critical that they thoughtfully plan their estates and advance directives.

By failing to have a will and other essential documents in place, the state's laws will determine which heirs will inherit your assets. These "heirs at law" are usually close relatives such as children, parents and siblings. If no living relatives can be located, the state may ultimately acquire these assets. In either scenario, these decisions may not be consistent with a person's wishes, or disputes can arise between those who believe they are entitled to an inheritance. For example, the artist Prince passed away unexpectedly in 2016 without a will. He was unmarried and had no children, and his parents had both predeceased him. Under the laws of the state of Minnesota, where he lived, his siblings would inherit his substantial estate in equal shares. Since Prince had no will identifying his siblings, several persons came forward claiming to be children of his late father. The result was lengthy and expensive probate litigation.

Estate Planning 101

The first document a single individual needs to have is a will that establishes how assets will be distributed, designates an personal representative (also called an executor in some states) to probate the will, and names guardians for minor children. It is important to specify who should inherit the individual's homestead, vehicles, personal property, and of course the "residue" of the estate, which is everything else the decedent owned. Choosing a personal representative for your estate requires designating someone who is trustworthy and capable of handling a complex task that may involve providing the beneficiaries with a detailed accounting of the estate. For those reasons, an attorney, CPA, or other person with the right skill set who is subject to the professional regulation is sometimes nominated as personal representative. In addition to a will, it is also crucial for single individuals to establish who will be responsible for making financial and healthcare decisions for them in the event they become physically or mentally incapacitated. This requires several documents. By creating a durable power of attorney, a single person can name a family member or trusted friend or adviser who understands financial matters to manage their personal and financial affairs. For health care matters, a separate document is required, which will nominate health care surrogates, who are authorized to access medical records and to make decisions about medical treatment and care when the person is unable to communicate his or her preferences. It is also prudent to designate a guardian who will be in charge of your person and your property if you are ever totally incapacitated and declared a ward of the court.

Lastly, for those who have annuities, life insurance, and retirement plan assets, it is crucial to ensure these designations are up-to-date and are aligned with the estate plan.

The Takeaway

Many single people mistakenly believe that don't need an estate plan either because they have no significant assets or don't have children. Another mistake many individuals make is using form documents taken from the internet to plan an estate. In short, it is crucial to engage the services of an experienced estate planning attorney who will take the time to understand your circumstances and help create a well-designed plan that protects your assets and ensures your wishes are carried out.

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