Singles Need Estate Planning Too
Oct 27, 2015
Single individuals need to plan for their estate just the same as married couples do. Some of the issues faced by singles are different, but the importance is just as great.
When a single person with no estate plan passes away, their assets are usually distributed to their heirs at law, which would be their children, and if none, then parents, then siblings, etc. For any sibling that has predeceased, their share goes to their children (nieces and nephews). If there is a deceased niece or nephew, their share goes to their children (great nieces and nephews). Worse yet, if there are no surviving family members, the assets may go to the State of Wisconsin. If there is no will, this is called intestacy.
To avoid the default in the state laws, and to ensure assets are distributed to the desired loved ones and charities, a will or trust should be created providing distribution provisions, and naming a person to administer the estate upon death. Instead of relying on a court to appoint a person to administer the estate, a chosen trusted person or professional company can be appointed in the estate plan.
If there needs to be a probate, with or without a will, all the heirs must be notified throughout the process. If there are numerous heirs, it may be difficult and costly to track down their contact information and then send them the required documents throughout the administration process. A probate is required in Wisconsin when there are $50,000 or more in assets that need to be transferred to beneficiaries via the will or intestacy (no will). This does not include any assets owned by a trust, owned jointly with another person, or those with a person or trust named as beneficiary.
When a beneficiary is named on an asset, such as a life insurance policy or a retirement account, it’s important to confirm that it coordinates with the overall wishes in the estate plan. The beneficiary is going to supersede anything in the will or trust. Therefore, if a former spouse is named, it’s imperative to get those beneficiary designations updated to the desired individual(s), or even better yet, to a trust. It likely does not make sense to name the estate as beneficiary.
Equally important, powers of attorney are needed. If one is ever unable to make their own medical decisions, a health care power of attorney is important to designate a trusted person to make health care decisions. Also, a power of attorney is needed to choose someone to manage assets and make financial decisions. Without these documents in place, if one would be unable to make these decisions themselves, a court proceeding would be required where a court would appoint someone. This process is called a guardianship, and the judge gets to choose who will be the decision maker. Also, there are some decisions that the appointed person would have to come back to court to get approval for, such as selling real estate. This can not only be a costly process, but can be time consuming and overwhelming during a stressful time. This does not give the incapacitated person the advantage to choosing the people they believe would act the wisest, and the opportunity is lost to discuss their wishes with the person of their choice.
It’s important to consult with an estate planning attorney to make sure that an estate plan covers all bases and will eventually be distributed to the desired individuals and charities.