31st May 2018

> Every legal adult should ensure that his or her wishes are clearly stated in proper estate planning documents.
 
> Safety nets available to married individuals with children are not as reliable for single individuals.
 
> Failing to plan can burden loved ones to collect assets, resolve conflicts and administer the estate based on state law through the probate court.

Certain life events, such as marriage, the birth of a child or the illness or death of a loved one trigger the thought of estate planning. However, single people without children often neglect to think about estate planning or decide that they do not need a plan simply because they may not have any dependents. This is a mistake. The truth is that every legal adult should have an estate plan in place. In fact, it could be argued that single people need a clear, complete estate plan even more than married individuals.

Laws of Intestacy

An individual who passes away without a Will dies “intestate,” while a decedent who leaves a properly executed Will is referred to as having died “testate.” When an individual fails to establish an estate plan, his or her assets are divided amongst family members as dictated by the state’s laws of intestacy.

If a married individual with descendants dies intestate, the decedent’s assets are divided in shares among the spouse and descendants and distributed through the probate process. In Illinois, such assets would pass one-half to the surviving spouse and the other half to the children in equal shares, with the share of a deceased child passing to his or her descendants, if any are then living. While the percentages may not be in accordance with the decedent’s wishes, the law does keep the assets within the expected group of desired beneficiaries, which is the decedent’s spouse and descendants.[1] A single individual without children, on the other hand, does not have this luxury.

If an individual passes away without a spouse, children and a proper estate plan, his assets are divided amongst his parents and siblings first and then amongst more remote relatives. This can lead to significant, undesirable personal, financial and tax consequences. For example, the decedent may be in a long-term relationship, have stronger ties to certain siblings or other individuals, have certain loved ones who are less financially comfortable or may not want to pass assets up to older generations for tax or financial reasons. Without a proper estate plan, the individual’s heirs and percentages are left to be determined by the probate court based on state law.

Joint Assets

Another tool that unmarried individuals typically do not (and should not) utilize is the use of joint accounts, which can sometimes provide a safety net for married couples who fail to implement a proper estate plan in a timely manner. A joint account or asset with a right of survivorship will pass directly to the joint owner as long as he or she survives the decedent. However, if the joint owner does not survive or both owners die simultaneously, the account or asset will be subject to the probate process. Owning assets jointly with anyone other than a spouse can expose those assets to additional risks and unintended inheritance consequences and should not be used as a substitute for proper estate planning.

Naming Property and Health Care Agents

Powers of attorney for property and health care allow an individual to name an agent to act on his or her behalf if he or she is unable to do so. The default agent for a married individual is typically his spouse, but for an unmarried individual, there is no default agent who takes priority over other relatives. Additionally, under current laws, a family member Just as married individuals should have proper estate planning in place to name successor agents if the spouse is unable to act, an unmarried individual must have proper documents in place to specify his primary and successor agents since the law or standard practice will not do so without court intervention.

Planning Considerations

While an unmarried individual without dependents may not feel the same urgency to have an estate plan in place, proper documentation of his or her wishes is extremely important since the assumptions imposed by law are insufficient. Additionally, as is the case for all individuals, simplifying the estate administration process for the loved ones who survive the individual should be a priority. This includes not only the avoidance of probate but also the reduction of potential conflicts. By having a proper Will, Revocable Trust and Powers of Attorney in place and accessible to the individual’s loved ones, the individual can ensure that that his assets will be divided and distributed in accordance with his or her wishes rather than state law and that the process will be as efficient as possible in terms of the cost, time and energy required of the decedent’s surviving family members.

Footnotes:

[1] It is a common misconception that when an individual is survived by a spouse and children, the spouse will inherit the entire estate under the law. This is not the case, and if this is the desired result, as it typically is, it must be done through a proper estate plan.

 

 

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