Estate planning is a duty that many people neglect, but if estate planning is not done properly, it can cause survivors to go through a great deal of trouble. Many people understand the importance of estate planning for people with spouses and children, but it is equally important for single individuals.
William Huyler, a financial advisor from Pennsylvania, helps to prepare singles for the requirements of estate planning. He provides this guide to help single people secure their assets for the future.
Spend Time On Your Estate Plan
Many singles assume that estate planning is only for couples and people with families. In fact, singles should be equally careful with their estate planning. It is important to focus on protecting themselves and their assets if financial and medical decisions must be made on their behalf. They must also carefully consider where their assets should go after death, since there may not be a logical set of beneficiaries like children or a spouse.
Make a Power of Attorney
Everyone should have a financial power of attorney and health care proxy. Most spouses will want to choose each other, but there are cases where they may want to choose someone else.
A financial power of attorney is important to have because this person can act on your behalf if you are unable to handle your responsibilities. This often happens when people experience dementia or other disabling conditions. If you do not have documents in order, the court will appoint someone for you. This can lead to financial and legal problems, so it is best to name your own financial power of attorney.
In addition to a financial power of attorney, you will also need a medical power of attorney or health care proxy. This person will be able to make healthcare decisions for you if you are incapacitated. You should make your end-of-life wishes known to this person and make sure that they can act in accordance.
Create a Will
Having a will is extremely important for singles. Without a will, a probate court will decide where your assets go. This can tie up money for long periods of time. To make a will, the first thing that you should decide on is the identity of your heirs. You may want to leave your estate to a sibling, adult child, or parent. If none of these are an option for you, you can choose a close friend. You may also want to leave some of your assets to a nonprofit organization such as a community action group or the college you attended. Your will should clearly spell out who is to inherit your estate and how much they should get.
Consider Bank and Life Insurance Accounts
In addition to planning your will, you will need to designate beneficiaries for your life insurance, retirement account, and bank accounts. If you have beneficiary designations, they will override what is written in your will.
One of the most important estate planning vehicles that you have at your disposable is the revocable trust. While you are living, you should be the beneficiary. If you have a significant other, they may also receive benefits. Your revocable trust should include the names of the beneficiaries who will receive your assets after your death.
Creating a trust is also useful if you are handing your estate down to young family members. Keeping the money in trust for them until they have matured is a good idea. You will need to name a successor to your trust in the event that you cannot manage it yourself. If you are incapacitated with a disease like dementia, your successor will have an important function in taking care of your assets.
Making a revocable trust while you are still alive is key to successful estate planning for singles. Without a revocable trust, you may have to let your estate go to probate court in order to appoint a guardian or conservator. This means that the probate court judge will be deciding who can manage your assets, not you. Funding the trust now means that you will control the decision-making process.
Controlling estate taxes can leave more money in the hands of your beneficiaries. Is it a good idea to look into charitable donations as a way to reduce estate taxes. You can also give lifetime gifts to your family and friends.
Some clients ask financial advisors like William Huyler whether they should get married and take advantage of the better conditions for estate taxes. This is not advised.
Singles Should Plan Now
Many singles who do not have children may believe that they do not have a responsibility to plan their estates. This could not be further from the truth. Using tools like health care proxies, financial powers of attorney and revocable trusts can be the difference in allowing your money to be distributed in the way you wish.
William Huyler understands that singles may have a difficult time facing their own mortality, but he encourages them to plan for the future and decide which friends or loved ones they want to manage their affairs after death.