There is much discourse about estate planning for married couples, but what about seniors who are widowed or have never married? Single people often have more complicated estates – especially if they do not have close natural heir such as a spouse or child. Moreover, maintaining independence requires having Advance Directives in place to plan for incapacity. This article will focus on some of the unique challenges that the unmarried seniors may face.
It is crucial to understand which assets pass through a Will and which outside of a Will. Since a single person often holds assets in their sole name, at least some of their assets pass through their Wills. The assets that pass through a Will are those in one’s sole name with no designated beneficiary. These assets can include bank accounts, brokerage accounts, and real estate. Usually, retirement accounts and life insurance policies have designated beneficiaries. These accounts with designated beneficiaries pass outside of the Will and can pass directly to a partner.
Without a Will
When a single person dies without a Will, their assets pass by “intestacy.” New York’s intestacy law leaves no wiggle room. If the single individual has children, the children inherit 100%. If no children but parents are alive, then 100% to parents. If no children or parents, then siblings and children of deceased siblings…and so on down the bloodline.
Seniors with Life Partners
For the single individual living with a life partner, it is important to recognize that partners are not given legal rights to property. There is no such thing as common law marriage in New York State. Even if a couple has resided together for decades, the surviving partner is not entitled to any of the decedent’s assets. What if only one partner owns the couple’s home? If the plan is to allow the partner to live out their life there, then that partner must be designated as a joint owner or a beneficiary under a Will or Trust.
Having a Will that designates a partner as the beneficiary can direct that certain property passes to the partner. But it is not foolproof due to the archaic probate process. In New York, the probate process includes notifying and obtaining waivers from the decedent’s relatives. That is, those who would have inherited under the intestacy statute. These family members can present objections to the Will which jeopardizes the estate plan. If Courts invalidate the Will, the law of intestacy prevails. The intestacy statute assumes the deceased person would have wanted their estate to go to their family members, and not their partner.
Many seniors have life partners and children from a previous marriage. In such cases, they may want to care for a partner during the partner’s lifetime but then leave the assets to other beneficiaries. The best technique for implementing this kind of plan is to use a bypass trust. Such trusts can be created in a Will or revocable trust. This this trust 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.
Similar concerns exist for “unattached” singles not planning on leaving all their assets to relatives. Many people consider their friends their closest “family.” Others are charitably inclined. Naming friends or charities as beneficiaries in a Will requires the consent of the closest blood relatives. The further down the intestacy statute the blood relatives are, the more complicated the probate process. What if the closest blood relatives or their whereabouts are unknown? The Executor (with the help of a genealogist) has to locate them and and obtain their consent. This adds delay and expense. Often the estate settles with an obstinate relative to avoid the high cost of litigation.
Avoiding Probate with a Trust
If there is potential for conflict or relatives would be difficult to find, planning to avoid probate should be a primary goal of the estate plan. Establishing a revocable trust rather than a simple Will avoids probate and the need to obtain consent from relatives. The grantor maintains complete control over the assets during their lifetime. They can appoint a successor in case of incapacity or death. A trust has the advantage of avoiding probate so assets pass almost immediately to chosen beneficiaries. Avoiding probate is important where there is a need for seamless transition or family make up would complicate probate.
Planning for Incapacity
A complete estate plan includes not only a Last Will and Testament, but a Health Care Proxy, Power of Attorney, and Living Will. A Health Care Proxy allows a person to appoint an individual to make medical decisions for them if deemed incapacitated by a physician. For married couples, the spouse is often the first choice to serve in this role. But, for a single person the choice may not be as obvious and signing a Health Care Proxy makes it clear who will be in charge of those decisions. A Living Will is a statement of one’s wishes about end-of-life decisions. Taking the time to think about this in advance and put it on paper helps make certain your directions are followed.
Beyond decisions about health care, empowering someone to make financial decisions is also a vital part of an estate plan. Most single individuals hold their assets in their sole names, not jointly with anyone else. For this reason, naming an agent under a Power of Attorney is crucial to ensure your needs are met if you become unable to manage your financial affairs. Giving someone the power to act on your behalf should not be taken lightly. Careful consideration must be given to make sure the right people on your team.
Considering Costs of Long Term Care
Finally, singles should consider planning techniques that allow them to maximize their assets as they age. Being cared for in old age is difficult enough when you have a spouse or partner to help. When single people live alone, you’ll want to fully preserve assets and income 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!
Unmarried individuals need an estate plan as much, if not more, than their married counterparts. Seeking the advice of an estate planning attorney ensures your affairs are in order during your lifetime and at your death.