Estate Planning For Singles
By Cayucos Wealth
Published On April 15, 2024
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Make a will, draft a durable power-of-attorney, name an attorney-in-fact, and a health care proxy. Here's how.
By Janet Bodnar
Kiplinger.com, Feb 17, 2024
After I wrote a series of columns in 2022 about elder care planning for family members, I received a number of responses like this one: “What about married couples who have no children or whose family members don’t live nearby?” wrote one reader. “Or a single individual with no close relatives? How should these people plan for their own elder care?”
The short answer is that they should be doing much the same things as people who have families — except that their situation can be more complicated, so they may have to take extra steps.
In particular, you need to draft a durable power of attorney naming someone as “attorney-in-fact” to make financial decisions on your behalf should you become incapacitated, and you should appoint a health care proxy to handle medical decisions.
If you die without a will, state law determines how your assets will be distributed. But, says Smith, “no state has a statutory list of people to make financial decisions for you.”
Although adult children often fill this role, it’s fine to cast a wider net. “I don’t necessarily think of ‘family’ as blood relatives,” says Suzanne Blankenship, author of How to Take Care of Old People Without Losing Your Marbles. “I define ‘family’ as people who make me feel at home — someone like a trusted friend or colleague.” Even more important is that your representative be both financially savvy and trustworthy.
If you don’t know anyone who fills the bill, you can always hire a professional, such as an estate-planning attorney, a trust company or, in certain states, someone who has been licensed as a “professional fiduciary.”
What if the person you choose to be your attorney-in-fact dies or becomes incapacitated?
Reader Virginia Wilkins, who is 79 and has always been single, made her first estate plan in 1974 when she bought her first house, and she has been updating it ever since. “I’ve used many different professionals, including attorneys, accountants and financial planners,” writes Wilkins. Because we tend to select someone from our own generation, says Wilkins, “as we grow older, so do they, and they could retire or die before we do.”
As a result, one of the first questions she asks is about continuity: “What provisions have they made should they die or become incapacitated?”
What if the person you choose to be your health care proxy dies or becomes incapacitated?
In addition to your attorney-in-fact, the caveat about defaulting to someone from your own age group applies to choosing someone to be your health care proxy. In each case, Smith recommends having a second or third choice from a younger generation as a backup.
And just as you need someone with financial savvy to handle your finances, look for someone with a health care background to make medical decisions, or at least someone who stays calm under pressure. “Someone who panics over every stubbed toe is not the right person,” says Blankenship.
What happens to your pets if you become incapacitated?
An estate plan can also deal with issues that are of special concern to singles. For instance, Smith points out that many singles have pets, and you can use your will to name a guardian and provide financial support for your faithful companion.
How do you plan for estate taxes as a single person?
She also notes that a number of states impose their own estate taxes, which can kick in on estates that exceed as little as $1 million. Married couples have the ability to delay estate taxes till the death of the surviving spouse, but “singles need to plan for their own tax mitigation,” says Smith.
*Regulatory assets under management are assets where Sowell provides continuous and regular supervisory or management services to client portfolios. Assets under administration is a measure of the total assets for which Sowell provides administrative services.