Are You Single? Estate Planning Is Still Something to Consider!
The number of singles is on the rise in this country and every year there are more never-married, divorced, or widowed individuals. When it comes to the need for estate planning, your status as single or married does not matter. Single people need to plan and prepare for their future as much as married people. However, singles people do face certain unique issues, which require the use of some out-of-the-box thinking and tools. Some of these unique issues are discussed below.
When a person passes away without a will, his or her assets are distributed according to the laws of the state of residence. In case of married individuals, the spouse and children are almost always the ones who inherit the assets under the laws of the state. In case of single individuals, any assets usually go to their children and parents. If the single person does not have any children and his or her parents have passed away, then the assets go to siblings, if any, and down the bloodline to other more distant relatives. If no living relatives are found, the assets may go to the state.
In this situation, the close friends, long-time partners, or charities that the single individual cared for and might have wanted to provide for are completely left out of the picture. To ensure that these individuals and organizations will receive a share of the assets, the single individual should create a will and/or trust to ensure the assets are distributed according to his or her wishes.
Not all estate planning tools are meant to plan for when someone passes away. Some documents, such as Durable Power of Attorney or Healthcare Directive, are used to plan for when an individual is incapacitated or is beginning to have a hard time making serious decisions. In case of married people, the spouse or children will fill these roles if there are no designations made beforehand. However, in case of single people, if no one has been appointed to handle the person’s financial and medical affairs in these situations, then a distant relative or a stranger appointed by the state can be put in charge of making these decisions.
To ensure that the medical and financial decisions made while the person is incapacitated are still in line with his or her wishes, the single individual should, at very least, create a Durable Power of Attorney and a Healthcare Directive.
There are certain accounts, such as retirement accounts or life insurance policies, which have their own beneficiary designations. Therefore, these accounts will pass to the beneficiaries named on the account regardless of what happens. In case of people who are widowed or were previously married, it is very important to reexamine the beneficiaries on these accounts to ensure that the deceased person is not the designated beneficiary.
Tax planning is a lot more complicated for single people than it is for married couples. Single individuals can still take advantage of the federal individual exclusion. This will allow the portion of the estate that is within the exclusion amount to pass to the heirs tax-free. However some states also impose their own estate tax along with the federal estate tax. This means that for most single individuals, estate tax planning needs to be geared more toward “state estate tax planning”. The single individual should consider use of special trusts and/or gift giving during life to help with tax planning.
If you are interested in learning more about estate planning and the different tools used in this area, contact us at 1-844-HOLBORN and one of our estate planning attorneys will be happy to assist you.
Disclaimer: This post is meant for general informational purposes only, and it is not to be construed as legal advice. Holborn Law APC does not endorse any linked content. As with any laws, the information in this blog post may change at any time and may apply differently in different jurisdictions. The post may constitute Attorney Advertising as defined by the rules of professional responsibility of some jurisdictions. Holborn Law is based in Orange County and Riverside.The attorneys of Holborn Law APC are active members of the State Bar of California and licensed to practice law in California. All services relating to immigration and naturalization provided by Holborn Law APC are provided by active members of the State Bar of California or by a person under the supervision of an active member of the State Bar of California.