Do single people need estate planning? Perhaps you’ve been to an estate planning seminar. Maybe you’ve read a few articles in the paper of in magazines. Maybe you’ve contacted a Charleston estate planning attorney in the past. Are you now ready to talk about practical estate planning? Here are answers to some frequently asked questions.
Single people need estate planning too. An unmarried individual must plan not only for his or her death but also incapacity. All too often, our Charleston estate planning attorneys see how unmarried, incapacitated people can be taken advantage of by the person(s) nominated by the court to take care of them (see our Charleston probate attorney and Charleston estate litigation pages). These situations may be avoided if single people take the time for some planning. Many of my unmarried clients who do not have children have charitable goals that can only be achieved through proper estate planning, many other do not have charitable goals and want to make sure a specific loved one or friend receives the substantial portion of their estate, and many of the single parents we work with have a strong desire to ensure that their child’s other parent does not become the unintended heir of their estate
In short, everyone of all income and net worth levels should have a properly drafted, properly executed estate plan.
Why Do I Need Estate Planning?
It’s not for you. It’s for your loved ones or for whomever else you want to leave your family heirlooms, your furniture, your collection of various and sundry magazines, hole-in-one trophy ball, and shark head hanging in the game room. Seriously, though, it’s planning for your car, your miscellaneous brokerage accounts, stocks, your bank accounts, your IRA and other retirement benefits, your home, your life insurance, and all the other things you’ve accumulated over you lifetime. By doing some estate planning before it is needed, you will save your loved ones, family, friends and other beneficiaries of your generosity time, energy, and, of course, expense.
What Estate Planning Documents Do I Need?
The simple answer is that you need at least three properly prepared, properly executed documents. Most people, for various reasons, would be well served to have a fourth and fifth properly prepared, properly executed document, as well. A last will and testament (or simple will), possibly a trust, a power of attorney, a health care power of attorney, and a living will are the legal instruments used to carry out a practical, effective and efficient estate plan for most people.
What Are Each of These Estate Planning Documents?
The last will and testament (or simple will) is a formally executed, written instrument, that directs your personal representative (a person to act in your place because you are deceased) to dispose of your assets (probate assets) in accordance with your written wishes. It is an instrument that names guardians (including successors, alternatives) for your minor children. It is an instrument that designates who (including alternatives) you wish to serve as your personal representative. Simply put, your probate assets are those assets that are owned by you at death and do not pass to someone else under the terms of a contract that you entered into prior to death, such as a life insurance policy. Examples of probate assets include: real estate held in your name without survivorship rights in another; a bank or security account in your name without survivorship rights in another; your business; your household furnishings; your art collection. Any account or asset that is not set up to be transferred on death or paid on death to another named party is a probate asset. Thus, for example, the proceeds payable to a named beneficiary under a life insurance policy are not probate assets, nor are the proceeds payable to the named beneficiary of an IRA or other retirement benefit contract, nor is the joint and survivor, or payable on death, account you set up at your local bank.
Revocable Living Trust
There are all kinds of trusts. The most popular trust is a revocable trust, which is a contract you enter into during your lifetime that directs your trustee (generally you will act as the trustee during your lifetime) to manage and/or dispose of the assets transferred to the trust (during your lifetime and/or at your death) in accordance with the terms of the Trust. You can include a trust as part of your will or our Charleston estate planning attorneys can explain the benefits of setting up a trust separately from you will during your lifetime.
Durable Power of Attorney
The Durable Power of Attorney is a formal appointment of an agent (called an attorney-in-fact) to conduct your financial or business affairs in your name if you cannot do so yourself. What makes a Power of Attorney Durable is the language in the document that provides that the Power of Attorney will remain in effect even if you become incapacitated. Thus, if you do become incapacitated for a short or long period of time (or, for example you are out of the country at the very time a business-related document needs to be signed), someone will have the power and authority to act on your behalf. This can be a very broad, all-inclusive power, or it may be limited to certain business affairs. This document may be broadened to designate who you would like to serve as your guardian or the guardian of your minor child or children if one were required (thus, if you become incapacitated and a guardian must be appointed for your minor children, because you haven’t died, your will does not come into play).
Health Care Power of Attorney
The Health Care Power of Attorney is an instrument whereby you formally appoint a person to make health-care decisions for you when you lack (again, this could be short-term or long-term) the capacity to make them for yourself. Some states will allow you to customize your own form. South Carolina has a standard form that is easily recognizable by health-care providers.
The Living Will is a formal document that notifies the world that you do not want to be kept alive by artificial means, among other items.
Plan, Protect and Preserve
What makes estate planning simpler, and hopefully more attractive for you, is being able to sit down with one of our estate planning attorneys to determine what instruments are best suited for your needs and the needs of your family. Remember, it’s your assets that you want to preserve and protect during a period when you might be incapacitated, or pass on to your family (if that is the plan) in a fashion that saves taxes, if appropriate, and makes sense for your particular family situation. There is no good reason for putting off estate planning, even for single people. If you have estate planning needs, which everyone does, and you need these instruments put in place, it’s not too late. So be proactive and give us a call or send us an email.