Several Reasons Single People Still Need To Be Concerned With Estate Planning
When you’re putting together an estate plan, you often choose your spouse or children to fulfill your wishes. What if you are single? How do you plan your estate if you have no spouse or children? It’s a tedious task to find someone you trust who can make and carry out decisions you want when you are no longer able.
- Do you choose your parents?
- Do you choose your brother(s) or sister(s)?
The decision rests on two key factors – if your family members are still alive and if your relationship with them is good. This may or may not take them out of the running.
No matter who you choose, an estate plan is essential to making sure your wishes are executed in the event of your incapacitation or death. If you’re still concerned, reach out to one of our experienced attorneys to help you put together an estate plan.
There may be a time when somebody will have to take control over your financial affairs or make medical decisions for you. If you haven’t designated anyone just yet, the court will have to find someone to make those decisions for you, using the state law to make its decision. There are two vitally important roles where protection for yourself is needed:
- Financial Power of Attorney Agent – This is the person who handles the financial aspects for you when you cannot. For example, they may open a checking account or sign checks to make payments. The financial power of attorney determines what their job will entail and how long. This agent should be someone you trust to be responsible and keep meticulous records of financial transactions they handle for you and dedicate themselves to the role. And, should you not have anyone you trust, a professional can help you with this task.
- Medical Power of Attorney Agent – When you’ve become incapacitated and cannot make medical decisions, your designated medical power of attorney agent will make them for you. This person controls what happens to you medically rather than some judge appointing someone for you. This person will ensure that your wishes are carried out, and others understand what you want. If there is no one you trust to make these decisions in your family, ask a reputable professional or family friend. Be aware that some states bar doctors or other medical personnel from being an agent unless there is some exception.
What Happens With An Estate Plan
If there is no prepared estate plan, the state will use its intestacy statute to figure out who will attain your assets upon your death and how much goes to each one. States vary in their intestacy laws, but, in most cases, the assets go to your surviving spouse, children, parents, siblings and their children. It all depends on who outlives you.
Without a will, trust or other legal documents that name a beneficiary, a life insurance policy will need to go through the expensive, tedious probate process. The policy may also dictate who gets the benefits based on the agreement.
Without a named retirement account beneficiary, the probate court will designate who gets the benefits. And this could have unforeseen tax consequences and be dispersed based on the account agreement’s default rules.
Singles and Tax Plans
Married couples get the most benefits from the federal tax system, with an estate tax marital deduction and the ability to transfer an unlimited tax-free amount of asset to a surviving spouse when the other spouse has passed away. On top of that, a married couple can add the deceased spouse’s exemption amount to the surviving spouse’s exemption amount.
When you’re single, the exemption amount is $11,700,000 for 2021.
Much like married people, singles have a yearly exclusion amount of $15,000 for 2021 without the need to file a gift tax return and pay that gift tax. Married individuals are eligible to make larger gift amounts, splitting that amount between the two of them.
For instance, both spouses can gift $30,000 without a gift tax needing to be paid. While a return may be necessary, the spouses decide to split it so that both are just giving $15,000.
As a single, you have just the lifetime exclusion amount and yearly exclusion amount. Thus, you need to reach out to a professional tax associate to help you with your planning needs due to the complexity.
Right By Your Side…
An estate plan gives you some semblance of control because you outline what happens during your life and after you die. There are several ways to create an estate plan that ensures your wishes are fulfilled. If you need some assistance in putting together an estate plan that protects your legacy, reach out to our experienced attorneys to help you navigate the waters.