Just as much as married couples, estate planning for singles is critical. It is a common myth that estate plans are only necessary for married individuals with children. Read below for five of the most important issues that singles should remember when creating their Phoenix estate plan.
1. Plan for Incapacity
A comprehensive estate plan includes more than a will and trust. It also contains documents that plan for your incapacities, such as a living will, healthcare power of attorney, and financial power of attorney. For singles, in particular, these documents are critical. Powers of attorney allow you to appoint a trusted individual to make healthcare and financial decisions on your behalf. A living will communicate decisions about your end-of-life care.
If you are married and become incapacitated without these documents, your spouse almost always assumes the role of decision-maker. However, if you are single, there could easily be fighting between friends, siblings, parents, and other individuals who believe they should rightfully act in this role. Your loved ones may be forced to go through a time-consuming and expensive court process to name a guardian unless your estate plan provides for your wishes and directions. without this, someone that you would not have wanted to make decisions for you could easily be appointed by the court.
2. Choose Your Beneficiaries
Arizona’s intestate laws determine who will receive your estate if you die without a will in Phoenix. For married individuals, your spouse will inherit everything if you have no children. If there are children, the estate is split between the spouse and children. For many married individuals, this outcome is what they would have wanted anyway.
However, if you are unmarried, your estate may be distributed to your parents, siblings, and other more distant relatives. Often, Arizona’s intestate laws do not reflect the wishes of singles, who may want to leave their estate to friends or charities over more distant relatives. Having a will or trust ensures that everything you worked for will be given to the people and organizations that mean the most to you.
3. Create a Revocable Living Trust
A will is the most basic estate planning tool and the center of many plans. However, singles should seriously consider adding a revocable trust to their estate plan. Trusts, unlike wills, avoid probate which can be very beneficial for singles. During the probate process, the executor must notify everyone who would have been eligible to inherit if there had not been a will. These interested individuals have the chance to challenge your will. Even if their challenge is not successful, litigation can cost the estate a significant amount of money and delay the distribution of property to your rightful beneficiaries. Trusts are kept private and do not have notification requirements, so the distribution of property is often more streamlined.
Furthermore, certain trusts have tax benefits. These benefits are especially helpful to single individuals whose beneficiaries cannot take advantage of the unlimited marital deduction to reduce gift and estate tax. An experienced Phoenix estate planning attorney can answer questions about the various trust options and guide you through how to best reduce your tax liability.
4. Pick Successor Trustees and Executors
The majority of married individuals name their spouse as their executor and successor trustee. This is the obvious choice because a spouse is a trusted individual who is often the primary beneficiary. Unmarried individuals have a harder choice and should carefully consider who should fill this important role. After making their selection, they should communicate their decision with the chosen individual to ensure that they are willing and able to serve.
If you do not have a family member or friend qualified to act in this role, unmarried individuals should consider selecting a professional to serve as executor or trustee. The trust or estate would incur the cost of compensating the individual, but you could rest assured that the job would be done correctly.
5. Update Beneficiary Designations
It is critical for unmarried individuals to confirm that they have the correct beneficiary designations on their life insurance, retirement, and bank accounts. It is particularly important to update beneficiary designations if you were previously married. Your ex-spouse may still be the named beneficiary on some of your accounts, and these appointments will override any instructions you put in your will or trust.
Your Phoenix Estate Planning Attorney
Nicole Pavlik is an experienced Phoenix estate planning attorney who can help you create a comprehensive estate plan. If you have questions about estate planning as a single person, call Nicole Pavlik Law Firm today at (602) 635-6176 for a free consultation.