Much of the estate planning discourse revolves around planning techniques for the married couple, whether it be for tax planning or asset protection planning. However, for seniors who have never married or for those whose spouse is deceased, what, if any, special considerations need to be made? This article will focus on some of the unique challenges that the unmarried senior may face.
For the single individual who is living with another person but is unmarried, planning should be done to specifically provide for that partner, if so desired. It is important to recognize that partners are not given rights to property the way spouses are. Even if a person has resided with another for decades, without proper estate planning, that partner will not be entitled to assets of the decedent. If the plan is to give property to a partner after death, one should make sure that they designate that partner as a joint owner or as a beneficiary.
Having a Will which designates a partner as the beneficiary of the estate can also ensure that property passes to the partner; however in order for the Will to be carried out, it must go through Probate. In New York, the Probate process includes notifying and obtaining the consent of the decedent’s heirs. For instance, if a single individual with no children dies, but the parents or siblings of that individual survive, consent must be obtained from those parents, or if deceased, the siblings. If the family members do not consent, they have the opportunity to present objections to the Will which leaves assets to the partner. If their objections are successful, the Will is invalidated and the law of intestacy prevails which assumes the deceased person would have wanted their estate to be distributed to their family members, and not their partner. If a potential conflict may arise between a partner and family members, planning to avoid probate should be a primary goal of the estate plan.
For the unmarried person who is “unattached” and does not have a close relationship with any relatives, avoidance of probate is likely also an important goal particularly if they are charitably inclined since consent of family members is still required even when the beneficiary of a Will is a charity. In addition, singles who are living alone should consider planning techniques which will allow them to maximize their assets so that they can get long term care. Being cared for in old age is difficult enough when you have a spouse or partner to help you, but if you live alone, you’ll want to preserve assets and income to the fullest extent so that you can get the care you need. This may include looking into long term care insurance or doing asset protection planning, or both!
What if a single person is living with a partner and is desirous of providing for that partner, but wishes for their estate to ultimately be distributed to other family members? It is very common that a widow or widower has a relationship with someone for whom they wish to provide, but wants to ensure that their assets go to their children after both partners are deceased. The best technique for implementing this kind of plan is to use a trust. Trusts can hold assets for the lifetime of the partner, but distribute the assets to other family members after the partner’s death. Trusts also avoid probate so that potential contests are avoided. Depending on the type of trust utilized, trusts can also protect assets in case either partner needs Medicaid to pay for their long term care.
In addition to the foregoing considerations regarding leaving assets at death, it is equally important to remember that partners, friends or indeed family members, do not have rights to make decisions without proper planning. An estate plan is not complete without comprehensive advance directives which allow loved ones to make healthcare and financial decisions for you if you are incapacitated.