Estate Planning Tips for Singles
Posted by Richard on August 1, 2013
Estate planning isn’t just for rich, elderly people. Everyone needs to have a will and estate plan in place to provide for contingencies that may occur, and in the event of the individual’s death, to dispose of his or her property, minimize estate taxes, and provide for loved ones.
Estate planning is also just as important for single individuals as it is for married couples. Unless appropriate arrangements have been implemented, state law controls. If an individual becomes unable to manage, the courts may appoint a guardian for the individual’s person or property to make personal or financial decisions for the individual.
To avoid keeping your assets out of probate and out of the control of a court-appointed guardian, you need to ensure you’ve made your wishes clear. Here are some tips for singles when it comes to estate planning.
• Create a will. A will is a legal document that provides instructions for disposing of an individual’s property on his or her death. By writing a will, you can ensure that your estate will be distributed as you would want.
• Create a revocable living trust. Unlike a will, a living trust lets your “Successor Trustee” distribute your assets to the beneficiaries named in the document without going through probate. A revocable living trust covers three phases of your life: while you are alive and well, if you become mentally incapacitated, and after you die. While you are alive, the trust agreement will have specific provisions allowing you to manage, invest, and spend the trust assets for your own benefit. If you are determined to be mentally incompetent and can no longer properly serve as Trustee, then the trust agreement will name a successor “Disability Trustee” to take over and manage all of your finances. When you die, your Successor Trustee will be able to step in and pay your final bills, debts, and taxes. The trust agreement will then contain instructions about who will receive the balance of the trust funds after all of the bills have been paid.
• Draw up powers of attorney. Unmarried partners or friends generally can’t make medical and financial decisions for each other without signed authorization. Singles should select a person they want to act for them and sign legal documents that give him or her that power. It is possible to have different attorneys for different situations. For example, you could sign a durable power of attorney to allow someone to manage your finances and set up another durable power of attorney for health care decisions.
• Set up a living will. A living will (sometimes called a health care declaration or physician’s declaration) is a legal document that a person uses to make known his or her wishes regarding life-prolonging medical treatments. Depending on the state you live in, you may be able to combine this declaration with a durable power of attorney to create an advance health care directive.
• Make sure your beneficiary designations are correct. Your named beneficiary on life insurance policies and investment accounts will inherit those assets no matter what your will or living trust says. Remember to review and update documents related to those accounts every few years or after a life event such as a divorce or birth of a child.
The information in this communication is not intended to be legal or tax advice and should not be treated as such. Each individual’s situation is different. You should contact your legal and/or tax professionals to discuss your personal situation.
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