If you are single, or unmarried with no kids, you may not have thought much about estate planning. You might have assumed estate planning is only for married couples who need contingency plans for minor children. Just because you have no dependents, doesn’t mean your life or your partner’s life isn’t important enough to protect. There are a few situations you should think about to safeguard your health and your assets in case of incapacity or death.
Your Health:
Being single, have you thought about what would happen next, if you become sick? Who would make health care decisions for you if you could not do it yourself? A Medical Power of Attorney, also known as a Healthcare Proxy, is a good starting point. It allows a designated person to act on your behalf to make medical decisions. This spells out precisely what types of interventions you agree to if you are not able to communicate your wishes.
Your Decision Making:
If you were incapacitated, who would act on your behalf for decision making? A Power of Attorney can appoint someone to act on your behalf for financial affairs and other matters when single. Without this, a court would need to appoint someone to handle important decisions for you. This could delay access to bank and investment accounts and make it difficult to access the money needed to pay bills. These documents are only used while you are alive and should be constantly updated as your life changes. When you die, they are no longer valid, requiring you to already have a Will or a Trust set up to cover any next steps.
Your Assets:
Have you thought about who will tend to your assets and affairs after you pass away? Have you thought about who your beneficiaries and heirs are? For unmarried partners, the opposite partner must be listed as a designated beneficiary to receive benefits, as it’s not an automatic distribution. Only children and spouses are natural heirs. Check that the beneficiary designations on your life insurance, retirement, and bank accounts are in line with your wishes and your choice of recipients.
At a minimum, everyone needs a Will. If there is no Will, the Probate court can rely on South Carolina law to determine the order of inheritance. This is an expensive, public process that can be open to challenges and claims, as well as, cost up to 10% of the value of the estate. It is important to check your beneficiary designations as well. Those designations will override any instructions in your Will, so it’s important to always check in every three years to make sure things are properly aligned and updated. Ideally, the beneficiary of your Will should be a revocable Trust that will help you avoid Probate, and streamline inheritance administration to beneficiaries through the Trustee.
Why a Trust?
If you want to provide benefits for your partner, particularly, if you live together, and you are the breadwinner, you need the protection of a Trust. All Wills are forced in to Probate court, it’s unavoidable. Probate literally means “to prove,” so in essence you are proving in court that the Will is even valid. And the presiding judge may not even hold a degree, let alone a law degree. Your Will then becomes a mere framework of your wishes versus your exact specification and the judge decides what should happen next.
A Trust will allow your beneficiary to receive the assets upon your death without being proved in Probate court, and to your exact specification. Perhaps you want to securely provide income after you die, or a place to live, or a way to manage inheritance. Only a Trust can administer these wishes AND mitigate the Probate process. Trust are ultimately more private, secure, and typically more affordable than a Will in the long run.
3-Year Check-Ins
Having an updated estate plan can help ensure that everything you worked so hard for is distributed to the people, charities, and organizations that mean the most to you. At Wiles, we suggest you revisit your plan at least every three years to make sure your wishes are in alignment with your legacy. Sometimes major life events can spur the need to revise an estate plan earlier. Such events could be:
- Change in assets, or inheritance
- Break-ups
- Death
- Desire to change personal representatives, heirs or beneficiaries
- New business
- Real estate
- Relocation
- Sickness or disability
Key Takeaways
Unmarried Couples & Partners:
- Make sure to have documents in place to specify who can make financial and medical decisions on your behalf if you are incapacitated. This is critical (especially during the pandemic) to have these conversations and documents in order before an emergency arises.
- Check that the beneficiary designations on your life insurance, retirement, and bank accounts are in line with your partner or your preferred recipient.
- A Trust is the best route to safeguard you and your partner and to avoid Probate.
Singles:
- If you are single, you will need to focus on allowing someone else to make financial and medical decisions on your behalf.
- Spend time thinking about where your assets would pass at death, because there may not be a clear set of beneficiaries (like a spouse or children).
- A Power of Attorney on its own is usually not enough. It would be best to have a Will at a minimum and consider the route of a Trust to fully protect you and your assets from the Probate court.
If you are looking for help setting up a Trust, updating your beneficiaries, writing a Will, or gathering your key documents, Wiles Law Firm can help. Contact one of our estate planning attorneys today for a FREE consultation! Or get started on your own by using our free, downloadable e-planner to fill out your wishes. Preserve your legacy now!