When it comes to estate planning, many might believe it is really all about couples and families. With about 46% of American adults single (including widowed and divorced), that would leave a lot of people out. In fact, in some cases, an estate for a single individual is even more critical than a married person’s. This article from Kiplinger Online by Janet Bodnar, published 2/27/24, shares some insight into estate planning specifically for singles. Read on for some good information.
“Estate planning for singles: make a will, draft a durable power-of-attorney, name an attorney-in-fact, and a health care proxy. Here’s how.
Estate Planning for singles, like the planning that couples must do, is not rocket science. However, single people have some additional challenges that require careful thought.
After I wrote a series of columns in 2022 about elder care planning for family members, I received a number of responses like this one: “What about married couples who have no children or whose family members don’t live nearby?” wrote one reader. “Or a single individual with no close relatives? How should these people plan for their own elder care?”
The short answer is that they should be doing much the same things as people who have families — except that their situation can be more complicated, so they may have to take extra steps.
Estate planning for singles overview
“Estate planning is fundamentally important for singles,” says Erin Gilmore Smith, director of estate planning for Edelman Financial Engines.
In particular, you need to draft a durable power of attorney naming someone as “attorney-in-fact” to make financial decisions on your behalf should you become incapacitated, and you should appoint a health care proxy to handle medical decisions.
If you die without a will, state law determines how your assets will be distributed. But, says Smith, “no state has a statutory list of people to make financial decisions for you.”
Although adult children often fill this role, it’s fine to cast a wider net. “I don’t necessarily think of ‘family’ as blood relatives,” says Suzanne Blankenship, author of How to Take Care of Old People Without Losing Your Marbles. “I define ‘family’ as people who make me feel at home — someone like a trusted friend or colleague.” Even more important is that your representative be both financially savvy and trustworthy.
If you don’t know anyone who fills the bill, you can always hire a professional, such as an estate planning attorney, a trust company or, in certain states, someone who has been licensed as a “professional fiduciary.”
What if the person you choose to be your attorney-in-fact dies or becomes incapacitated?
Reader Virginia Wilkins, who is 79 and has always been single, made her first estate plan in 1974 when she bought her first house, and she has been updating it ever since. “I’ve used many different professionals, including attorneys, accountants and financial planners,” writes Wilkins. Because we tend to select someone from our own generation, says Wilkins, “as we grow older, so do they, and they could retire or die before we do.”
As a result, one of the first questions she asks is about continuity: “What provisions have they made should they die or become incapacitated?”
What if the person you choose to be your health care proxy dies or becomes incapacitated?
In addition to your attorney-in-fact, the caveat about defaulting to someone from your own age group applies to choosing someone to be your health care proxy. In each case, Smith recommends having a second or third choice from a younger generation as a backup.
And just as you need someone with financial savvy to handle your finances, look for someone with a health care background to make medical decisions, or at least someone who stays calm under pressure. “Someone who panics over every stubbed toe is not the right person,” says Blankenship.
What happens to your pets if you become incapacitated?
An estate plan can also deal with issues that are of special concern to singles. For instance, Smith points out that many singles have pets, and you can use your will to name a pet guardian and provide financial support for your faithful companion.
How do you plan for estate taxes as a single person?
She also notes that a number of states impose their own estate taxes, which can kick in on estates that exceed as little as $1 million. Married couples have the ability to delay estate taxes till the death of the surviving spouse, but “singles need to plan for their own tax mitigation,” says Smith.”
If this post doesn’t apply to your situation, please feel free to refer it to single friends and relatives. In my many years of experience, I have worked with a wide variety of clients, including singles. I would be happy to help you update or set up your estate plan for your particular situation and needs. Feel free to call 513-399-7526 to schedule a consultation, or visit my website, www.davidlefton.com, for more information.
Source: Kiplinger Online by Janet Bodnar, published 2/27/24