When it comes to estate planning, the focus is often on married couples. For those who have never married, are widowed or are divorced, the importance of estate planning is sometimes overlooked.
While estate planning for singles has always been important, the increasing number of singles is making it even more important. In 2014, the Bureau of Labor Statistics found that 50.2% of people over the age of 16 were single. This is the first time the single rate has exceeded 50% since the government began tracking these statistics in 1976, when only 37% of those over the age of 16 were single.
For singles, these are three of the most important things to consider when thinking about estate planning.
Establish your power of attorney.
When you’re married, you don’t have to think about who will speak for you when you’re unable to speak for yourself—it’s a role that’s assumed by the spouse almost by default. That’s a luxury that singles don’t have and must plan for. Find someone you trust and designate him or her as your power of attorney in case you become incapacitated.There are two general types of power of attorney documents. A durable power of attorney goes into effect as soon as it’s signed. A springing power of attorney only goes into effect once certain circumstances have occurred. Working with an experienced estate planning attorney can help you decide which makes more sense for your situation.
Don’t overlook your dependents.
If you have children, this is likely a non-issue as your kids are likely at the forefront of your estate plan. But even if you don’t have children, that doesn’t necessarily mean you are without dependents. You may be the primary caregiver for an aging parent or for a sick friend or sibling. If there are loved ones in your life that depend on you for caregiving or financial assistance, you may want to name them as beneficiaries on a life insurance policy in case anything happens to you.
You’ll still need a will.
If you die without a will, a court will assume the role of allocating your estate. This is known as intestate succession. If you are single and you have no blood relatives, dying without a will is problematic since there’s likely no obvious answer for the courts when distributing your estate. If you have friends or charities that you specifically have in mind to inherit your assets, it’s critical that you have a will stating your wishes to make sure your estate is distributed accordingly. Plus, your estate could end up paying more in taxes and probate fees if you don’t have a will.One thing to remember is that intestate succession does not affect all of your property. Things like life insurance policies and retirement accounts that have named beneficiaries will still go to whomever you named on the policy or the account, whether you have a will or not.
This is just the tip of the iceberg; every individual and family has unique challenges when it comes to creating their estate plan. Whether it’s your children, your siblings, your friends or a charity that you want to benefit from your estate, a complete estate plan can help make sure that your wishes are met and loved ones are taken care of.
JD, CFP®, Series 7 Securities Registration,1 Series 66 Advisory Registration,† Life and Health Insurance License Kate has been a financial planner at Wealth Enhancement Group since 2007. Previously, she assisted in the management of trusts and portfolios for high-net-worth clients. As a Senior Financial Planner, she is involved with the Roundtable™ and provides her expertise to help walk clients through the best way to organize their estates to ensure...Read More