The number of singles is steadily growing. In 1970, slightly more than a third of Americans age 15 and older were single, according to the U.S. Census. By last year, their numbers approached 50%. Among U.S. citizens aged 65 and older more than half (53%) of women and more than one quarter (26%) of men were unmarried last year. That amounts to 18 million divorced, never-married or widowed seniors.
Accordingly to a recent Wall Street Journal article titled “Estate-Planning Essentials for Single People,” single people face some unique estate planning issues. This is true whether they have always been single or now single again.
The original article reviewed several areas that should be of concern when it comes to estate planning for singles, to include:
Heirs. If you die and don't have a will or trust, your property may be divided up by the probate court according to the laws of your state. While that might work for some married couples who have children, it rarely works for single people. Typically, if you're married and you die without a will or trust, your spouse inherits most if not all of your assets. On the other hand, if you're single and die intestate, your estate could get distributed in unintended ways. Generally it passes first to your children (if any), then to your parents (if they're alive), any siblings, then more-distant relatives. Last, if no living relatives can be found, the state will take it!
So you can see how important it is to at least create a will and/or a revocable living trust that states specifically how you want your assets to be distributed after you die, as well as to name an executor and/or trustee to carry this out.
Decision Makers. If you don't designate an individual to take care of your financial and medical affairs in the event of your incapacity, your assets and care could fall into the hands of a distant relative or a stranger appointed by a judge. Be sure to sign a general power of attorney, an advance health-care directive, and an authorization for federal HIPAA laws to empower trusted individuals to make financial and medical decisions on your behalf in the event you become incapacitated. For those without spouses or children to fill these roles, it's especially important for single people to take care of this.
Estate Taxes. Any tax liability for your estate depends on how you are single. If you never married or you're divorced, any of your estate that's more than the federal individual exclusion is subject to tax. If you are a recent widow or widower, your federal exclusion amount includes—not only the individual estate-tax threshold—but also may include any unused portion of your deceased spouse’s exemption amount, which is termed “portability.” This is true even if you remarry. While the federal estate-tax exemption has risen in recent years, 19 states plus D.C. impose estate taxes of their own and/or inheritance taxes on the heirs who receive these assets.
Just a few states follow the federal portability rules, so you might need to create a special trust to make use of two exemptions. An experienced estate planning attorney can assist you with this.
If you are single or know someone who is, then these estate planning moves should be made without delay. This is not a do-it-yourself project either.
You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.
Reference: Wall Street Journal (December 7, 2014) “Estate-Planning Essentials for Single People”