Planning Your Estate when Single: Myths and Questions
As I continue to counsel single individuals on the benefits of having a plan in place should they unexpectedly become incapacitated (or worse), I’ve notices a commonality to their beliefs when it comes to preparing a trust or will. Below I summarize a common myth and a few questions that are often asked by those I speak with. If you have any questions on how planning can benefit you, please give me a call.
Myth: If I do not have an estate plan, all of my money and property will go to the state.
This assumption is generally false. While it is a remote possibility that the state may be the ultimate recipient of your money and property, that would only occur if you had no other living blood relative to inherit your money and property. Although the law varies by state, generally speaking, your money and property would first go to a surviving spouse if you are married, then to your descendants (children or grandchildren), parents, siblings, and your siblings’ children, in that order. Some state statutes may even look beyond that to your aunts and uncles or cousins. Depending on the size of your family, there could be a lot of people who would have to predecease you before your money and property would be turned over to the state.
Although the likelihood of the state receiving your hard-earned money and property is slim, this should not be used as an excuse not to plan. You have the ability to choose exactly whom you want to receive your money and property as well as when and how. Do not let the state take that choice away from you.
Question 1: Should I wait to do my estate planning until I know who should get my money and property?
No. While you may not be 100 percent sure who should receive all of your money and property at the time of your first meeting with us, that should not discourage you from taking the next steps to have your estate plan prepared. Working together, we can discuss your ultimate goals for your money and property and craft a plan that addresses these wishes. In addition, should your life circumstances change, we can change the beneficiaries of your money and property in your will or revocable living trust.
Additionally, who gets your money and property is just one component of an estate plan. An estate plan also provides instructions regarding your medical wishes and appoints individuals to make financial and medical decisions for you in the event you cannot make or communicate them yourself. If you are having trouble determining who will make decisions for you, we can help walk you through the decision-making process. And just as for the recipient of your money and property, you can change the individuals you have named as your trusted decision makers as long as you are mentally able to.
Question 2: If the state already has an estate plan for me, why should I bother creating my own? Isn’t the state’s plan good enough?
If you do not proactively create your own personal estate plan, the state will use its default plan, known as the state’s intestacy laws, to determine who will receive your money and property, as well as how much money and property those individuals will receive and how. Any money and property an individual receives will be given to them outright (all at once). The only exception to this is if the money or property is to be distributed to a minor (someone who is not yet eighteen or twenty-one years old, depending on your state law). In that case, the money and property will be held by a court-appointed conservator or guardian, and the child will receive everything once they are no longer a minor.
If you are still alive but need someone to make medical or financial decisions for you and you did not complete your own estate plan, a judge will select someone, often a family member, to make the decisions for you. This is a time-consuming, expensive, and public process that can create additional stress for you and your loved ones during a time of potential crisis.
Relying on the state’s plan and leaving your family to figure out what you would have wanted can lead to disagreements among family members and the possibility of your hard-earned money and property being used to pay legal fees and court costs instead of benefitting your loved ones or causes you care about. It may also take longer to wrap up your affairs, which could cost more.