In estate planning, one common tactic individuals consider to avoid probate is adding their children…
Single people with no children sometimes feel like they might live forever. We know that’s not true, but children do seem to serve as markers of the passage of time. The protections offered by an estate plan for singles while they are living, is especially important.
Single people need to have an estate plan just as much, if not more so, than married people with children. That’s because an estate plan includes naming people to handle financial and health decisions, if you become incapacitated due to illness or injury. If retirement is on the horizon and you still don’t have an estate plan, it’s really time to get this done, says this recent article from Forbes, “5 Estate Planning Strategies For Singles.” Here’s what you need to know:
Power of attorney and a health care proxy. These are used while you’re still alive. They let you name who will make important financial and medical decisions for you, if you can’t make them for yourself. A single person must be sure that she’s named someone she trusts to make these decisions. When you die, the power of attorney and health care proxy are no longer valid, so you also need to create a will and trust.
Will. You need to designate an executor of your estate. This individual will take care of your affairs after you die, probate your will if necessary and pay any income and estate taxes. The beneficiary of your will can also be a revocable trust that you create during your lifetime.
Revocable trust. While you are alive, you should be named the primary beneficiary. You may also want to provide benefits for your significant other, especially if you live together and you’re the primary breadwinner. Name the beneficiaries who’ll receive the assets at your death. You also need to name a successor trustee to manage the trust assets, in the event you are unable to manage them yourself. The successor trustee will play an important role, if you’re incapacitated. As a single person, naming someone to manage the assets for you is an important part of your planning. If you fund the trust during your lifetime and are later incapacitated, the successor trustee can use the funds for your care.
Estate taxes. Many singles don’t mind if their beneficiaries receive less, and the government receives more. However, if you do care, there are many planning options to consider, such as charitable giving as a way to reduce taxes and give back to those charitable institutions that have played an important role in your life. You can also make lifetime gifts to family and friends.
There is no time like the present to put your estate plan in place. Consider the people you’ll leave behind: do you want to fund a favorite niece’s college education or make sure your nephew gets your record collection? Without an estate plan, the court decides who is in charge and what happens to your assets. Think of an estate plan as a way for you to create a legacy for loved ones.
Reference: Forbes (March 15, 2019) “5 Estate Planning Strategies For Singles”