Estate planning for singles
- Anatoly Iofe
- Oct 1, 2024
- 6 min read
Estate planning isn’t just for married couples or those with children - it’s equally important for singles to have a well-thought-out plan. It provides peace of mind, ensuring that your wishes are followed both in life and after death.
But while it may seem like estate planning would be simpler for someone who’s never been married or doesn’t have kids, the reality is more complex. Whether you're a young professional or a retiree, estate planning can be more involved than you think.
Without an Estate Plan, You’re Leaving Big Decisions to Strangers
If you pass away without an estate plan, you’re considered to have died “intestate.” This means that state laws will determine who inherits your property, or who makes decisions on your behalf if you become incapacitated. For those who are married or have children, state laws typically favor these immediate relatives, so the outcome may align with what they would have wanted. However, for singles, the process is much more uncertain.
In the absence of a spouse or children, the courts will go through a hierarchy of relatives, starting with parents, then moving to siblings, nieces, nephews, and even cousins. As the line of relatives gets more distant, there’s a good chance that the person making decisions on your behalf or inheriting your property may not be someone you would have chosen. This could lead to unintended consequences, where individuals you barely know, or even distant relatives you dislike, end up handling your estate.
Moreover, if you have no living relatives, the state could appoint a guardian to make decisions for you. In extreme cases, your assets could even go to the state, effectively disinheriting those you care about.
Clearly Define Your Healthcare Wishes
For singles, particularly those without children or a close family network, it’s critical to specify your healthcare preferences. A healthcare power of attorney is a document that names someone you trust to make medical decisions on your behalf if you’re unable to do so. Without this, medical professionals could be left guessing, and someone who doesn’t understand your wishes might be making these decisions.
An advance healthcare directive is another essential document. This outlines your preferences for end-of-life care, including whether you would want life-sustaining treatments in certain situations. Without an advance directive, doctors are legally required to continue life-saving measures, even if those aren’t in line with your personal wishes. Specifying your desires for scenarios like being kept on life support or receiving aggressive treatments could save your loved ones from making emotionally draining decisions during an already difficult time.
Who Will Manage Your Finances if You Can’t?
Naming someone to manage your financial matters if you become incapacitated is another vital part of estate planning for singles. A financial power of attorney grants someone you trust the ability to manage your finances, pay bills, and take care of day-to-day financial tasks when you’re unable to do so. It’s important to choose someone who is not only financially responsible but also trustworthy.
In many cases, this role can be filled by a friend or a relative—such as a sibling or a niece or nephew—but it’s important to make this decision carefully. Additionally, you should create a detailed list of your financial accounts and advisors, so the person managing your finances knows where everything is and how to handle it properly. Regularly updating this list is just as crucial.
Revocable Trusts Offer Flexibility
A revocable trust can be a game-changer when it comes to managing your estate. This legal entity holds your property—be it real estate, investments, or bank accounts—and allows you to maintain control of your assets while you’re alive.
What’s great about a revocable trust is that it can be changed at any time. If you become incapacitated, your designated trustee steps in to manage the assets for you, ensuring that your bills are paid and your finances are managed appropriately.
A major advantage of using a trust is that it avoids probate. Probate is the legal process of proving a will and distributing assets, which can be time-consuming and costly. For singles without a large family, avoiding probate is especially important because it ensures that the transition of your assets goes smoothly.
Trusts typically cost about 1% of the assets they hold each year, but the peace of mind they offer is often worth the price.
A Will Is Still Essential
While a revocable trust can cover many aspects of your estate, having a will is still critical. A will outlines exactly where you want your assets to go after you pass away. Whether it’s friends, distant family members, or charitable organizations, your will ensures that your wishes are followed.
For singles, it’s also important to consider naming a caretaker for any pets you have. You can even set up a trust fund to ensure that they are well taken care of after you’re gone. Remember to update your will as your life circumstances change to ensure it reflects your current wishes.
Be Mindful of State Inheritance Tax Laws
One area where singles can face significant challenges is state inheritance tax laws. While the federal estate tax only applies to estates over $13.61 million as of 2024, many states have much lower thresholds. Single individuals can be disproportionately affected by these taxes because many states provide exemptions based on family relationships.
Pre-Arrange Your Funeral
Although it’s not something people like to think about, pre-arranging your funeral can relieve your loved ones of the emotional burden of making these decisions after you’re gone. You can specify whether you prefer burial or cremation, and even choose the specific arrangements you want. Pre-paying for your funeral is another option that can help ensure your wishes are followed.
Make sure that the people you’ve chosen to handle your estate are aware of your funeral plans. Documenting these plans and sharing them with loved ones will ensure that everything is carried out according to your wishes, and it prevents any misunderstandings.
Plan for Long-Term Care
As a single person, planning for potential long-term care needs is essential. You may not have immediate family to rely on for caregiving, so it’s critical to consider how you’ll handle these needs as you age. There are several options, including long-term care insurance or hybrid life insurance policies that offer long-term care benefits.
Another important consideration is how you’d like to receive care. If you prefer to stay in your home for as long as possible, you might want to think about modifications to make it more accessible. You could also look into in-home nursing services to provide care in your own space, rather than moving to a nursing home. Proper planning can help preserve your independence and ensure that your wishes are respected.
Establish a Support Network
Lastly, it’s essential to have a support network in place. You don’t need to go through life’s challenges alone, even if you’re single. Establish regular check-ins with a close friend or relative to ensure that someone is looking out for your well-being. This could be as simple as a daily text message or phone call to make sure everything is okay.
Staying active in community groups, clubs, or religious organizations can also be beneficial. These social connections are not only good for your mental and emotional health but can serve as an informal safety net, ensuring that if something goes wrong, someone will notice.
Conclusion
Estate planning for singles is not as straightforward as it may seem. From naming healthcare and financial powers of attorney to avoiding taxes and ensuring your assets are distributed according to your wishes, there are many elements to consider.
By taking the time to develop a comprehensive estate plan, you can protect your future, avoid unwanted complications, and provide peace of mind for yourself and your loved ones. Whether you’re young or approaching retirement, these ten considerations will help guide you through the complexities of estate planning as a single person.
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Sources*:
*These organizations are not affiliated with IFG. IFG does not endorse, support, or recommend any information that is not provided by its affiliates or representatives.
Disclaimer:
Information provided is for informational purposes only, and does not constitute an offer or solicitation to sell, a solicitation of an offer to buy, any security or any other product or service. Accordingly, this document does not constitute investment advice or counsel or solicitation for investment in any security. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.
