Estate Planning and the Single Person

10/03/2012

Many single people are under the impression that estate planning is only needed for someone who is married or has children. The truth is that a single person often has just as much reason, if not more, of a reason to create an estate plan as someone who is married or who has children.

Consider the following:

Intestate Succession:  If you fail to execute at least a Last Will and Testament, state law will decide who receives your assets in the event of your death through the intestate succession laws. This means that friends, charities, children of friends or anyone else (aside from immediate relatives) who is dear to you will not receive anything from your estate.  Further, your immediate relatives may not get the amount you would otherwise want or desire.

Incapacity: If you become incapacitated, a court will likely need to decide who will have the right to make medical decisions for you and who will control your money. Well-meaning friends or relatives could end up in a nasty court battle for the right to control one or the other.

Estate taxes: If you are single, and have been financially successful, your estate may be subject to the high rate of estate taxes when you die. Fall-back mechanisms like the marital deduction will not apply, meaning that a significant portion of your estate assets (35% or more) could be lost to taxes if you fail to plan ahead.