If you’re single and you have relatives or friends to whom you would like to pass certain assets, then you need an estate plan, says the article “Estate planning important even if you’re not married” from Rocky Mountain Telegram.
If you die without a last will or other estate planning documents in place, the laws of your State decide who is in charge and how to distribute assets. That may not be what you wanted, but it will be too bad—and too late.
Also, as you age, having someone in the wings you trust to step in, pay bills and make decisions becomes more and more important. Many of our clients opt for revocable trust planning as they age because a trust eases the path to someone helping out without court action.
If you want to leave assets to family members or close friends, you’ll need to plan for this with the last will and possibly a trust. The same goes for any donations you may wish to leave to one or more charitable organizations. You could name organizations in your will, but there are many different ways to give to charity, and some have tax benefits for you and your heirs.
One way to leave assets to charity is a Charitable Remainder Trust. Your estate planning attorney will help guide you through the steps. Appreciated assets, like stocks, mutual funds, or other investment securities, are transferred into an irrevocable trust. You get to name the trustee—you could be the trustee if you prefer—and then you can sell the assets at full market value, avoiding any capital gains taxes that you’d pay if you sold them as an individual.
If you itemize your income taxes, you might be able to claim a charitable deduction on taxes. With the proceeds, the trust can purchase income-producing assets and provide an income stream for the rest of your life. When you die, the assets remaining in the trust will go to the charity or charities that you have named.
Family members and charities aren’t the only ones to consider in an estate plan for a single person. It would help if you prepared to protect yourself. With the absence of an immediate family, being protective of your financial and health care decisions requires a durable power of attorney and a health care proxy, among other documents.
The durable power of attorney authorizes a person of your choice to manage finances if you become incapacitated. This is especially important when there is no spouse to take on this role. Your health care proxy, also known as medical power of attorney, authorizes someone you name to make health care decisions on your behalf if you are unable.
If you have a significant other that you want to provide for, having documents can also assure that they are involved and not evicted immediately if you die.
Estate planning can be complex and is usually more so for a single person. An experienced estate planning attorney will be an invaluable resource as you go through the process. Who will be the best candidate to select as your power of attorney? What other documents do you need to ensure that your assets go to the people or charities you want? Once this is done, you’ll be prepared for the future—and protected.
Reference: Rocky Mountain Telegram (June 6, 2021) “Estate planning important even if you’re not married.”