Estate Planning for Singles

Jun 28, 2022 | Estate Planning & Administration

Many people wait to prioritize estate planning until marriage or children, but estate planning is equally important for single people. While some single individuals may not need a will to provide protection for a spouse, partner, or minor children, they do need to focus on their own protection and lay the groundwork for allowing someone else to make financial and medical decisions on their behalf if they are unable to do so. Furthermore, because there may not be a clear set of beneficiaries, like a spouse or children, single persons may need to spend more time deciding who will receive his or her assets at death. People become single for a variety of reasons—widowhood, divorce, or never having been married. Some singles have children, while others do not. There is no one estate planning solution for every single person but having a plan in place is vital.

A Last Will and Testament is the primary document that comes to mind when most people think of estate planning. An essential planning tool, a will dictates distribution of your assets from your estate to surviving relatives, friends, or favored charitable organizations. If you are a single parent, it can also address the nomination of a minor guardian for any minor children.

It is important to consider the person you will name as executor of your will. This individual will enforce the decisions made in your will, as well as manage the closing of your estate once you have passed away. (You may have co-executors if you want more than one person represent you.) The executor of your will can also oversee any final arrangements regarding your death notice or obituary, funeral, etc.

Without a will, state law will determine the order of inheritance of your assets. Additionally, if you have a partner but are not married, unless your partner is named as a beneficiary in your estate plans your assets could be passed on to your children or your next living heir instead of to your partner. This is also the case with common-law relationships. Even though it is a legal relationship, it does not afford the same rights as marriage and is only recognized in a limited number of states. Including your common-law partner in your will ensures he or she will receive any assets according to your wishes.

In addition to establishing a will, other important documents to consider include power of attorney(s). A healthcare or financial power of attorney can give the individual(s) you select the authority to make healthcare and financial decisions on your behalf in case you become incapacitated. Alternatively, advance directives (e.g., a living will or do-not-resuscitate (DNR)) help guide the specific decisions of doctors and caregivers if you become incapacitated and incapable of expressing your wishes regarding your medical treatment.

Depending on your needs, establishing a revocable living trust is another option you might consider including in your estate plan. This document allows the trust creator or grantor to place selected assets in trust. Typically, the grantor is named as the primary beneficiary during his or her lifetime and may also act as his or her own trustee. The grantor retains rights over the trust and may change or revoke the trust at any time. In the event of the grantor’s incapacity, a revocable trust also dictates who will manage the trust and financial affairs, which could prevent the need for competency hearings and court proceedings to appoint a conservator or guardian of the assets.

Remember to also review named beneficiaries annually for brokerage accounts, savings accounts, 401(k)s, ROTHs, or any other types of retirement accounts. Accurate beneficiary designations will ensure assets pass directly to the person(s) you choose and simplify the transfer process since these asset types can often be designated to pass separately from the instructions in a will.

No matter your relationship status, by creating an estate plan, you ensure your intentions are properly carried out. It is important to consult an estate planning professional who can help you develop a strategy for your estate plan that suits your unique needs.