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If you think that just because you are single that you do not need a will or an estate plan in place, think again. The assets and ownership interests you have in a home and other real property, stocks, retirement account, business or other property can be reduced by federal and state taxes and by having to go through probate if you pass away without a will or other testamentary measures in place. Your property will also be distributed according to the state’s law on intestate succession if you die without a will, which can be contrary to your wishes.
What is an Estate Plan?
An estate plan is a series of legal documents that serve a number of purposes if you become incapacitated and when you pass away. If drawn up properly, you can name a trusted friend or financial professional to deal with your financial affairs and a guardian to provide for your medical care should you become incapacitated. It also provides for the orderly administration of your estate including the distribution of your assets once you pass away. An estate plan can consist of a will, trusts, durable power of attorney, health care proxy and directive, deeds, and other instruments your estate planning lawyer can advise you on.
What Can an Estate Plan Do?
With the proper legal documents and establishment of trusts and/or other instruments, the state and federal taxes on a decedent’s estate can be greatly minimized or even eliminated. Also, you have a say in the disposition of your assets upon your death by naming the beneficiaries of your will, trust, life insurance policy, annuity, retirement, and POD accounts. If you suffer a stroke or a catastrophic accident that temporarily or permanently incapacitates you, naming a guardian or giving a trusted friend, family member, or entity the authority to make financial and health care decisions for you is essential. If you have no will or other testamentary instrument in place in accordance with the statutory authority.
Further, without a will, the court will appoint an administrator who may not be concerned with the tax consequences or any other considerations affecting your estate. The administrator is usually there to just inventory the assets, pay off the estate’s creditors, and see that the applicable taxes are paid and that the property goes to someone. If you become incapacitated, the court will also name a guardian whom you might not know to make the essential decisions about your health and finances. Any single person should consider meeting with an elder law attorney about what documents you should have prepared in accordance with your personal wishes, to protect your assets and to preserve your estate once you pass away.
What Should Be in an Estate Plan?
Some of the documents you might consider having as part of your estate plan include:
- – Will
- – Revocable or irrevocable trusts
- – Health care proxy with advance directive
- – Living will
- – Durable power of attorney
- – Life estate deed
- – Declaration of homestead
A will is the simplest document a single person can have as part of their estate plan. It allows you to name the beneficiaries of your property, designate an executor or administrator, and even set up a testamentary trust. Although a will has to go to probate, your estate may be eligible for a short probate process if it is small enough.
A trust is more complicated though it need not be filed with the court or made public. Your property is placed in a trust and managed by a trustee, which can be an individual or entity such as a trusted family member, friend or a bank. It is similar to a will except it does not go to probate and anyone can be disinherited. It is rarely subject to challenges of mental incompetency, undue influence, or duress when it was established. You should discuss the advantages and disadvantages of a trust and how it is set up with an estate planning lawyer.
Health care proxies are another advance planning tool where you designate someone to make important medical decisions for you once your doctor determines you are no longer capable of doing so. You can limit the powers your agent may have in your proxy. The advance directive can also limit these decision such as not agreeing to life-sustaining measures or other medical care if you become brain dead or under other particular circumstances. You can name a Guardian to spare your family the requirement of court involvement to appoint someone, should the need arise that you are not able to manage3 your own health care needs on a permanent basis. You need to sign the form before two witnesses and give copies to your doctor, named agent, hospital and family members.
A living will is not legally recognized in Massachusetts though it can be considered by the court if it needs to intervene about life-saving measures. It also gives directions to your health care providers about your wishes regarding measures to prolong life or not under certain circumstances. Your health care proxy can also have these directions as well.
A durable power of attorney is in extremely important document to have prepared along with your Health Care Proxy document. Your attorney-in-fact can have the power to write checks, pay creditors, make investments, and sell assets. You can revoke the document at any time so long as you are competent. You can name a Conservator to spare your family the requirement of court involvement to appoint someone, should the need arise that you are not able to manage your financial affairs on a more permanent basis.
Call Elder Law Attorney Patricia Bloom-McDonald
Patricia Bloom-McDonald is a Massachusetts elder law attorney who has been advising single people as well as seniors and their families about elder law and estate planning issues for over 24 years. She can advise you of the advantages and disadvantages of a will, trust, or other legal document and what measures you should now consider to protect your assets, your wishes regarding your health care, mitigate taxes and smooth the transition of your property to whomever you wish.