Single People and Estate Planning
Quite often, single people are under the impression that they don't need an estate plan, especially if they have no apparent heirs, such as children. However, single people with assets not only should develop an estate plan, but they should keep up with it over the years. A solid plan is the only way you get to decide where your assets go when you pass away. If you don't have a plan, the state gets to decide that. What if you have a favorite charity that you'd like to support; would it be better for the state to send your money to your next of kin, who could be a cousin you've never even met? If they find no one, your assets will simply go to the state. That's like 100% taxation.
Of course, estate planning involves a lot more than dividing up your assets when you die. Part of a good estate plan should also include directives instructing what should be done in the event the single person becomes incapacitated, which can happen at any time, for a number of reasons, such as heart attack, stroke, severe injury or even dementia.
Should a single person become incapacitated without a sufficient plan, a state court will appoint someone to exercise authority over their finances and make health care decisions for them. That means there is an excellent chance the person the court chooses will not be someone you would have chosen. Also, keep in mind, heading to court to set up a guardianship or handle your affairs can often be expensive and is always very time-consuming to whomever the court appoints. Working with an experienced and professional estate planning attorney will allow any single person to create an advanced directive regarding their health care, as well as a power of attorney and a health care proxy. Combined, all of those allow the single person to take control of the process by giving explicit instructions regarding their health care and by making sure someone you choose has the authority to carry it all out.
It's especially important for divorced single people to make sure they have a comprehensive estate plan, and to keep all beneficiary designations up to date on their bank accounts, life insurance and retirement plans, such as IRAs. Failing to plan properly could result in an ex-spouse getting everything. That may be fine in some cases, but make sure it's your decision.
Put simply, a good estate plan is a great idea for everyone, regardless of where you are in life, even if you're single.
