There is an emphasis on estate planning for individuals with spouses and children. But, I would assert that estate planning is just as important for single individuals.
If you are single and own a house or have non-beneficiary driven assets worth over $150,000, you should consider a living trust. The amount of $150,000 is the threshold amount because in California, you can distribute assets worth under $150,000 without a living trust. This does not include your beneficiary driven assets, such as life insurance, 401(k), annuities or IRA’s because these accounts already have named beneficiaries.
A living trust allows you to specify beneficiaries, contingent beneficiaries and charities who will receive portions of your estate. If you are giving a portion to minors, you can consider a staggered distribution meaning that he or she will not receive his or her distribution until reaching a particular age. Also, you will have a document in place that will ensure that your assets are distributed to the individuals or charities of your choice. Without a plan, you are leaving it up to the court to distribute your assets according to the distribution provisions found in the Probate Code. This may not accurately represent your wishes.
If you do not own real property or have liquid assets over $150,000, then a last will and testament may be sufficient. In any event, you should either executive a living trust or will, depending on your circumstances.
The other issue is planning for possible incapacity. Part of a properly drafted estate plan contains a Durable Power of Attorney and Advance Health Care Directive. Both of these documents are typically springing meaning that they only go into effect upon incapacity. The document goes into effect upon the preparation and submission of two letters from doctors stating that the individual is incapacitated. Upon the submission of this letter along with the properly executed document, your named agent can take care of your health decisions and financial decisions.
The Durable Power of Attorney allows were agent to “step into your financial shoes” and take care of your finances. For example, he or she can pay your bills, deposit checks, and file your tax returns. The document is durable meaning that it goes into effect while incapacitated, but is no longer in effect when you regain capacity.
The Advance Health Care Directive allows your agent to make health decisions regarding life support, type of treatments you will receive, and where you will receive medical treatments. In the document, you will designate a proxy to make these decisions for you, as well as alternates. You can also provide in-depth instructions regarding the medical intervention you would want and not want.
It is just as important for a single person to have an estate plan in place. With a little planning, you can ensure that your estate is distributed to whom you wish and you will ensure that there are named proxies who are designated to take care of your finances and health care, if needed.
Source: Affinity Trusts. Not affiliated with KeyPoint Credit Union.