Unmarried individuals cannot afford to neglect estate planning.
Sometimes singles are told they are not really responsible adults unless they are partnered or married.
This concept can be quite harmful.
It encourages people to place confidence, hope, and security in another fallible human.
It also devalues those who are unmarried.
According to a recent Rocky Mountain Telegram article titled “Estate planning important even if you’re not married,” this idea can also be quite harmful in estate planning.
This message may become an excuse to delay estate planning until married.
Unmarried individuals often believe they have little to lose by waiting to create an estate plan.
This could not be further from the truth.
In reality, death and taxes will take from anyone — married or single.
If you die with no valid estate plan, you will die intestate when it comes to any of your assets that do not have a surviving joint owner or designated beneficiary.
This means the probate court will apply state intestacy law to determine who will inherit your assets subject to probate.
Your probate assets could end up with someone you do not trust merely because of how they are related to you.
At the very least, you will need a last will and testament to distribute probate assets to your friends, family, or charitable organization.
Although a last will and testaments is the most foundational document of an estate plan, other methods of asset transfer may be better for tax minimization planning.
Whether married or unmarried, trusts can help you better meet your estate planning and tax planning goals.
Take a charitable remainder trust, for example.
This legal arrangement allows you to transfer mutual funds, stocks, and other appreciated investment securities into an irrevocable trust.
You can either name yourself or another entity as the trustee.
The trustee can sell assets at full market value and avoid any capital gains taxes on the sale.
By itemizing your income taxes, you will likely be able to claim charitable deductions on your tax forms.
You can purchase income-producing assets with the proceeds and provide yourself with a steady income stream.
Any remaining assets in the trust will be transferred to the charity of your choice when you die.
Unmarried individuals also need to plan for incapacity.
If a sudden illness or accident leave you incapacitated, then you will need to have a trusted individual manage your financial affairs and make health care decisions on your behalf.
To designate these roles, you will need to create a durable power of attorney, one for financial matters and the other for health care matters.
What do these do?
A durable power of attorney for financial matters allows you to designate someone to manage your money and pay your bills if you cannot do so yourself.
As an unmarried person, this is critical, especially since you do not have a spouse to step into the role.
With a durable power of attorney for health care matters, someone will be able to talk with doctors and make decisions on the care you are to receive.
Unmarried individuals have unique needs in estate planning.
Working with an experienced estate planning attorney will help you create a plan to best suite your circumstances and goals.
Reference: Rocky Mountain Telegram (June 6, 2021) “Estate planning important even if you’re not married”