posted by Eric Schutzbank
Being single doesn’t mean you do not need an estate plan. Single people need to be taken care of if they become incapacitated and also want to have a say in how their property is distributed after their death. Single people often have unique considerations when planning for the future. Married couples most often have their spouses act as their fiduciary in the event of incapacitation or death. Older couples with adult children general have their children designated to make decisions when they or their spouse can no longer do so. Single people without children need to involve friends or other relatives in their medical emergency and end of life arrangements. You do not want to find yourself in a situation where the Commonwealth has to appoint a stranger to make decisions for you.
Documents used to convey what should take place if a single person becomes incapacitated can include a durable power of attorney, a health care proxy or other advance care directive and/or an authorization under HIPPA rules. Employing one or more of these documents will authorize your agent to make medical and financial decisions on your behalf in the event you are not able.
There are basically two types of durable power of attorney: A Spring Power of Attorney and a Shifting Power of Attorney. A springing power of attorney only comes into effect upon an event such incapacitation or disability. In contrast, a shifting power of attorney applies immediately when it is signed. For medical decisions in Massachusetts, a Health Care Proxy is necessary. For those who travel frequently or own property in other states, a living will (a statement indicating what the person wants to have happen to them should they need to be on life support) may be required.
A single person without children may not have parents or siblings who can make decisions for them if they are unable to do so. That doesn’t mean that they should give up their rights to decide who makes those decisions in the event they can no longer do so. Single people without parents or siblings may have other family members, friends or valued charities he or she wishes to leave their property to upon their death. Setting up a revocable living trust or making a will is the way to make sure that his or her wishes take precedence.
If there are no directives set up, the estate of a single person becomes subject to Massachusetts probate process and is disbursed under Massachusetts law. In the case of single people with children, probate would distribute assets along blood lines. Children inherit first, followed by parents, siblings, relatives according to distance removed. Absent any of these, an estate lacking a will or trust would go to the Commonwealth of Massachusetts.
Where possible, it is a good practice to ensure that your Personal Representative (formerly called an Executor) has liquid funds available to pay for activities he or she performs on your behalf. Making the executor a co-signer to your bank account can be a time-saver so long as you trust that person to have access to your funds. If you want your personal effects to go to specific people, craft a list to assist the Personal Representative. Considerations such as these alleviate hard feelings and make it easier for survivors to satisfy your wishes.
It is important to know who is listed as a beneficiary on retirement assets and life insurance assets. Whoever you list as beneficiary to your IRA or brokerage account will remain, unless changed. If you are single because of a divorce, whoever is on that line will prevail even though you became divorced. It is important to check your retirement and other accounts after you divorce to insure you are leaving those assets accordingly to your current wishes.
One way to simplify the process would be to just add a beneficiary using a TOD (Transfer on Death) or POD (payable on death) designation on your asset accounts. Setting up accounts this way accomplishes a couple of things: the accounts are neither subject to probate or to provisions of a trust or will.
TOD/POD beneficiary accounts provide flexibility in that contingency heirs can be named to an account and heirs can be easily changed. Remember to update them if your life situation changes.
For those without family, choosing the right person to carry out your wishes might be difficult. In this case, working with an estate planner is beneficial. Whether single or married, having a plan in place should you no longer be able to care for yourself is extremely important.