You may be single. If you are, you are part of a growing crowd, According to the Pew Research Center, half of the adults in the U.S. are single, up from only 28% in 1960. The percentage of adults who have never married is 30%, double what it was in 1960.
Not only has the percentage of singles has increased, the percentage of women who’ve never had children has also increased. The Pew Research Center reports that 15% of U.S. women have not had any children, up from 10% in 1970.
I have noticed this in my practice. Over the last several years, there has been an increase in the number of my clients who are single and have no children. If you are single without kids, have you thought about who you want making financial and health care decisions for you when you are unable? To whom do you want to leave your stuff after you are gone? Have you done any estate planning?
Estate planning is more than just death planning. Estate planning is keeping control of your property and other assets while you are alive and well, providing for you and your loved ones in the event you became mentally disabled, and after you are gone, giving what you have, to whom you want, when you want, the way you want.
You can grant authority to make decisions for you if you are unable to others through financial and health care powers of attorney. Without a financial power of attorney, someone would have to be appointed as your conservator by the probate court, before he or she could make your financial decisions for you. Similarly, with no health care power of attorney, someone would have to be appointed your guardian by the probate court, before he or she could make medical or mental health care decisions for you.
I recommend that you not only name financial and health care agents, you should name at least two backup agents. I have seen too many cases when only one or two agents are named and none can act due to death, illness, moved away or some other reason. So although the person has financial and health care powers of attorney, they still end up in probate court with a guardian and conservator.
If you are single and have no kids, who do you name? Many of my single clients have named a trusted friend or sibling as financial or health care agent. If your parents are still alive and well, you may want to name them. After siblings, you may want to follow the family tree, nieces and nephews, great-nieces and great-nephews and so on.
If you do not have relatives or a trusted friend who could make these decisions, you may want to think about trusted family advisors, such as your CPA, tax preparer, financial advisor or pastor. You may have a long-standing relationship with them, and trust them to make these decisions. The person you name does not necessarily have to live near you. He or she could live in another city or another state and still be able to make decisions for you.
Your bank may offer trust services and would act as your financial agent in the event of your mental disability or after your death. Your financial advisor or life insurance agent may be associated with an affiliated bank or trust company that could be named as your financial agent. These captive banks and trust companies typically handle financial matters for their affiliated company’s brokerage customers and policyholders.
When choosing financial and health care agents, make sure they have the skill set to do the job. I have seen on more than one occasion when people chose individuals over a professional trustee because they did not want to pay the 1%-2% annual fees, and the individuals chosen did not have money management skills. Bad outcomes. They would have been way further ahead paying the 1%-2% annual fees.
When you are gone and have done no planning, your estate will go through the lengthy and expensive probate court process. Since you are single and have no kids, all of your property and other assets would first go to your parents, if they are alive.
In the event that your parents are no longer alive, all your stuff would be divided among your living siblings and the descendants of any of your deceased siblings. If none, then to grandparents and then to descendants of your grandparents. If there are no heirs to be found, then everything would go to the State of Michigan.
And if you have any heirs who are minors, their share of your estate would be held in a court appointed conservatorship until they reach age 18, when they become adults and gain all the wisdom and insight of adulthood and can handle large sums of money. At age 18, the court distributes all their conservatorship assets to them. They then go to college, the University of Corvette.
What is important to you? You may not want your stuff to go to your brother whom you haven’t seen in 15 years. Do you want to benefit that lazy nephew or the druggy niece? Or you may have a favorite friend or relative who has been particularly attentive towards you, whom you want to remember.
If you have decided upon individual beneficiaries, then how do you want them to receive their inheritance from you? If you left it to them outright, it would be subject to claims by their creditors and/or divorcing spouses. If however, you left the inheritances to them in separate lifetime trusts, the inheritances would available to the beneficiaries, but protected from claims by others.
Is higher education important to you? If so, you could do what some of my clients with no children have done, set up educational trusts for nieces and nephews or private scholarship funds at your favorite college or university or your local community foundation for certain classes of persons to be used for post-high school education.
And if there are no specific individuals whom you want to benefit, then what are your passions? What charities have you been supporting during your lifetime? Unless you remember them in your will or trust, they will not have the benefit of your support after you are gone. Do you want to continue to support your church? How about protecting animals or the environment? Do you want to help support substance abuse programs or cancer research? I have had clients over the years who have done all of these, and many more.
With proper planning, you can not only protect yourself during your lifetime, you can leave a legacy that will have a lasting impact long after you are gone.
By Matthew M. Wallace, CPA, JD
Published edited March 26, 2017 in The Times Herald newspaper Port Huron, Michigan as: Planning for singles with no kids