No Kids = No Need for Estate Planning? Not Really

For many, the image that comes to mind with the phrase “estate planning” is a will that explains how their property should be divided among their heirs—typically a spouse, children, and possibly grandchildren. Most of us would agree that we should give careful thought to our families and how our estate will be divided among them upon our passing; a properly design will or trust is certainly the best way to ensure that our wishes are carried out.

But persons without children—whether single persons or couples who, for whatever reason remain childless—may not feel much need to have an estate plan. After all, if there are no children or other family members to inherit, what difference does it make what happens to their possessions after they have passed? Does anyone really care?

As it turns out, there is always someone who cares: the state where you live. In fact, the state cares so much that it has an estate plan, ready-made for those who die intestate (without a will or other document directing the disposition of the estate): it’s called state probate law. In other words, if you die without any estate plan in place, the state will decide what happens to your assets—and what the state decides may or may not be what you would have preferred.

No matter whether you have children or not, or whether you have a spouse or significant other or not, you should probably take control of the disposition of your estate following your death, even if you don’t think you have a large estate to bequeath. Perhaps you have friends, siblings, or even a favorite charity that you would like to have benefit from your assets. The best way to make sure that happens is by having an estate plan in place.

Additionally, estate planning goes beyond apportioning your assets after your death. Certain elements of estate planning are very important while you are still living, and especially for single persons, it’s important to make sure these elements are in place and designed according to your needs. Let’s take a look at some basic elements of estate planning and explore why they are important to have, whether or not you have children or a spouse.

1. Will. This document, familiar to most, stipulates what you want to have happen to your property when you die. Your estate consists of everything you own, including cash, securities, real property, business interests, collectibles, vehicles, furniture, and everything else. All of this has a value, and the terms of your will determine how that value is allocated and distributed upon your passing. And remember, if you die without a will, the state will decide what happens to your possessions. It’s always better to make these decisions yourself.

2. Durable power of attorney. This estate planning document stipulates who is authorized to make decisions for you in the event you are unable to make decisions for yourself, either temporarily or permanently. Unlike a will, a durable power of attorney (POA) takes effect while you are still living, but unable to direct your own affairs. The holder of a POA can pay your bills, make sure your tax return is filed, and perform other important required tasks that you would be unable to do if incapacitated. Especially for single persons, it is vital to appoint a trustworthy person of your choosing; otherwise, the state will appoint someone to act on your behalf—and it may not be someone whom you would have chosen.

3. Advance medical directive. Similar to a POA, but applying specifically to medical decisions, an advance directive specifies what types of treatment you do or do not want, in the event you become incapacitated and unable to direct your own care. The person you appoint to hold your advance directive is able to consent or not consent to care on your behalf. This matters, because in situations where there is no advance medical directive, physicians and other caregivers must wait until the court appoints a guardian or make their own judgment, which may or may not be what you would have wished. An advance directive allows you to decide in advance for yourself, thus putting you in control.

Steps to Creating an Estate Plan

It’s always best to have a qualified legal advisor prepare your estate planning documents, but there are some questions you can consider that will help the process go more smoothly and ensure that the final documents are appropriate for your particular situation.

1. Who will you choose as your executor? The executor is the person or entity entrusted with seeing that the terms of your will are carried out as specified. This is a position of trust, so you’ll want to choose someone whom you believe will deal fairly with all parties while making sure your wishes are upheld. An executor can be a friend or family member, an attorney, or a business entity such as the trust department of a bank. Before the will is drafted, you should talk with your intended executor to make sure that they agree to serving in this capacity.

2. Who do you want to hold your POA and advance medical directive? This may or may not be the same as your executor. In fact, you may want different people to hold the POA and the advance directive. For example, if you have a friend who is a physician or other medical professional, you may want them to hold your advance directive, since they likely have access to better information than someone with no medical training. Conversely, if you have a friend or associate who is knowledgeable in matters of finance, you may prefer to have them making important decisions if you’re unable to make the decisions yourself.

3. How do you want your estate distributed? Is there a charitable or religious organization you would want to support with your bequest? Are there certain individuals you would like to receive specific assets or property? All these terms can become part of your will. Persons with significant estates may even wish to consult an estate planning professional about stipulating the funding of a trust to receive the assets of the estate as a condition of the will (this is called a testamentary trust) and then distribute the assets according to the terms of the trust.

4. What about your pets? This last point may seem trivial to some, but there’s a reason why people are starting to refer to their pets as “fur babies.” You can choose their new “parents” as a term of your will, and you can also set aside funds to provide for their care by means of a trust.

At Aspen Wealth Management, we know that our clients want to ensure that their assets are being used wisely, both during and after their lifetimes. We are able to work with attorneys and other estate planning experts to develop individualized strategies for making sure our clients’ most important priorities are always at the forefront. To learn more, please visit our website.