Single People Need Estate Planning Too
Being unmarried does not mean the same thing to everyone. Maybe, you were never married or maybe you were married and that ended? Or maybe, your situation created factors that were like a marriage. What if you have a “partner”?
You do not need to be married to have a need Estate Planning. This includes if you have never been married and even if you do not have any intention to marry. For one thing, single adults planning for unmarried individuals becomes especially important, because the estate, inheritance, and gift tax advantages available to married citizens are not available to single people. Therefore, failing to have basic planning documents can cause unintended results and unnecessary taxes.
More importantly, some are unmarried after serious relationships that ceased to be, whether there was a marriage previously or a co-habitation. Estate Planning needs may be more important if you are no longer married, as well, particularly when you have children and you are now alone. Who will manage your children’s lives and the management of their financial interests that they might have in your estate? This is something which should be urgent, since there may also be exceptional circumstances when the children related to differing parents whom you were involved .So, the idea of linking marriage to be a basis for having an Estate Plan is misguided by the ideas of marriage.
Basics Necessary Documents
If you are unmarried, who will oversee your affairs if you were unable to do so? To avoid having the law created by your state legislature apply to your circumstances, the right documents can protect you and your interests by giving trusted persons, family or special friends, the authority to oversee your affairs if you cannot. Such documents would be for a period of time, only.
Health Care Matters—Medical Directives
The scope of managing your health care matters can be for a brief period or one that is indefinite. Consider that if you are traveling extensively Creating a document where you can name one or more agents to communicate with your healthcare providers if needed may be advisable. Verbal authority is not enough These documents have various names, such as “healthcare power of attorney or a “health care directive” . It is the power and authority that matter since it will be a memorialization of your intentions. It indicates your preferences to third parties to name a person (an agent) to communicate with others regarding your medical care.
Failing to name such a person in your healthcare document can cause unwanted and unnecessary confusion. Your healthcare providers may turn to your “next of kin” for advice, such as a parent or a child, who may not know your wishes, or might impose their own wishes which could be contrary to yours. Even if you are cohabiting but unmarried, your cohabitant is not legally part of your family and can be precluded from having any say, even though you may want them to have a say. As your cohabitant is not among your next of kin, your cohabitant may be excluded from discussions about your healthcare.
Most importantly, this may include decisions at the end of your life. Without a clear statement of your intent, it is possible that your family may be divided over decisions regarding your end-of-life care, causing an irreparable rift over what is inevitably an exceedingly difficult and often heart-wrenching decision. This may be part of the same document or could be a separate document form other health care directives.
Durable Power of Attorney
What would happen if you were unable to manage your financial affairs or the management of your assets such as real property? Who would pay your bills, manage your bank accounts, manage your property, and communicate with both institutions and individuals on your behalf? If you do not have a durable power of attorney, then your family may need to seek a court-appointed guardian to manage your assets.
What happens if you were in a coma or have dementia? Maybe you have had an accident, and you are in a coma? Do you think it might be good idea to have someone designated by you to oversee your affairs? If you ever are incapacitated, an agent appointed under the durable power of attorney can manage your financial affairs while you are unable to do so. A durable power of attorney can be useful to allow your bills to be paid with your available resources during a challenging time.
As with any position of trust, the person you choose is under a special duty to act on your behalf and not on their own. Its scope depends on circumstances specifically relating to your circumstances. Many times, this document may be part of a more global document that includes both healthcare matters and financial matters.
Most importantly, a general power of attorney presumes that the principle can know who is acting and the scope of the conduct by the agent. Choose your agent carefully, as that person can do with your assets anything you could do with them, even give them away.
Without it being durable, the document can be challenged if the principle lacks capacity; mainly the mental ability to revoke. The important word is durable since the document can survive if you become incapacitated.
Trusts: Revocable and Irrevocable
Another way to have consistent management of your investible and other assets would be to fund a revocable trust during your lifetime. As the name implies, this is a trust, where the trustees and not necessarily the grantors who contributed the property will make the decisions. However, it can still be revoked which could end or modify the trust. You can revoke or amend during your lifetime. You can be the beneficiary of the trust during your lifetime. Typically, you would also be the trustee or more trustees.
Your investment assets would be held in the trust’s name and not in the name of an individual. .If you became incapacitated or died and you are a trusted, then your successor trustee would immediately become the trustee and would continue to manage the property in the trust without interruption. As described below, the trust may also dispose of your assets following your death.
An irrevocable rust amounts to being a complete transfer, with no ability to end or modify. This is for special situations, where an estate may have a federal estate tax future obligation. It can be interpreted as a “gift” in the form of a trust that has noteworthy features and benefits beyond those who need a revocable trust.
Will or No Will --Disposing of Property at Death
Following your death, your estate must be administered. That is, someone must gather your assets, pay your outstanding debts, pay your final income taxes and the taxes associated with transferring your assets and finally distribute your remaining property to your beneficiaries. This can be done with a will or through statutory rules that presuppose your lineage. This statutory order may not be what you want to do with your estate. So, you may need a Will.
A Will, or a will in combination with a revocable trust, would dispose of your property following your death. Such a document (or documents) would also appoint one or more people or entities to conduct your directions, including the allocation of taxes among your beneficiaries. If you fail to make a will, state law will dispose of your property, and you may not desire that result.
Your will, or will and revocable trust, can create trusts to hold property for people not able to manage it, such as your children. You would name the trustee of the trust who would manage the property in the trust for its beneficiaries until directed by the trust’s terms to distribute the property. In many states, trusts never have to distribute their assets. Of course, by writing the trust, you make the rules with respect to the management and disposition of that property.
Also, your will can nominate guardians for your minor children. Although a surviving parent has the first right to be guardian, not all surviving parents are qualified to be guardians. Although any guardian nomination must be approved by the appropriate court, by naming a guardian you are letting the court know your preferences with respect to who should care for your children following your death.
Not all property passes by will. Some assets, such as retirement plans, individual retirement accounts and life insurance, pass pursuant to beneficiary designation. Be sure your beneficiary designations are aligned with your estate plan. Also, do not forget to complete the beneficiary designations for benefits provided by your employer.
Owning Property with Another
For unmarried individuals, owning property together can be challenging. Failing to plan for that property can have dire consequences. How you own your property makes a difference, both while you are alive and following your death. Transferring property to someone to whom you are not married can also cause tax consequences. Before acquiring property, adding someone to a deed or bank account or transferring property, be sure to seek legal assistance so as to understand your rights before and after the transfer.
Other Matters
Often, unmarried people living with one another may also be living with children. Let’s consider the following ideas for planning for your children if you die. Be sure someone can care for your children if you are temporarily unable to do so or if you are deceased. Remember, you are obligated to support your children. If you are living with stepchildren, the end of your relationship may cause you to lose visitation rights. Be sure you understand your rights and protect them appropriately. Not all states allow an unmarried cohabitant to seek financial support from the other cohabitant after a breakup.
Unmarried individuals should plan for life just like anyone else. It is important to be aware of your state’s default rules with respect to healthcare, property ownership and division and distribution of property upon death. You should consult with legal, tax and financial advisors who can help you navigate life’s diverse relationships.