6 Estate Planning Tips for Singles

2. Choose your personal rep or trustee

Look for a personal representative or trustee who will oversee your affairs once you’ve passed: someone who is organized, has sound judgment and is able to handle financial matters. This can be difficult if you’re single, says Peter Palion, a CFP and founder at Master Plan Advisory in East Norwich, New York. “Ideally, one would have two of each — i.e., a “primary” and a “contingent” — which increases the challenge.”

“Single people often procrastinate because they don’t know who to name as a beneficiary or as the executor of their estate,” says Linda Rogers, a CFP at Planning Within Reach LLC in San Diego. “I always encourage them to put someone down! You can always change it. If you don’t name someone, the courts will, and it might not be who you want.”

3. Be thorough

Your estate plan should include the following, keeping your state laws in mind.

• Last will and testament. In addition to naming a personal representative or executor to carry out your wishes, a will also specifies your heirs and beneficiaries, and how they will receive your assets. Beneficiaries named on any retirement, insurance or investment accounts take precedence over any others named in your will. You can name guardians for your kids, make allowances for pets and include instructions for your funeral or burial.
• Living trust. Although not essential, a living trust provides for the transfer of assets from you, the owner, to a trustee you name, to avoid the delays and expenses associated with court probate. The trust sets the terms for the management of your assets and how they will be distributed to your beneficiaries in their best interest .
• Financial power of attorney (FPOA). You authorize someone to make financial decisions if you can’t. Otherwise, a court will appoint someone to make them. FPOA can prevent delays in the access to your bank and investment accounts, which would make it difficult to pay your final bills.
• Living will. Also known as durable medical power of attorney or an advance health care directive, this document lets you designate someone to communicate your health care wishes if you can’t. This includes pain management, organ donation, and the desire to decline excessive health care or life support.
• Health care power of attorney (HPOA). With this document, also known as a health care proxy, you appoint someone to make health care decisions for you if you’re incapacitated. It applies to other aspects of medical care, in addition to end-of-life care.

4. Assemble your team

To create your plan, you may need a team of advisers, such as a certified public accountant (CPA), estate planning attorney, financial adviser and maybe a life insurance expert, Baxley says.“These professionals can play a pivotal role in making sure one’s wishes are carried out as they age and after they pass.”

What about the cost? If you’re still employed, see if your employer offers a legal services benefit, says Rogers. “This is becoming more and more common, and it is significantly cheaper than paying for an attorney — on the order of $200 versus $2,000.” If not, Rogers suggests looking into an online service like LegalZoom.

5. Allow for long-term care

Some 70 percent of seniors will need some sort of long-term care, so it’s important to plan for it. According to the National Institute on Aging, the term describes a variety of services people need when they can no longer care for themselves. Care can be provided at home or at a long-term care facility.

Cody says there are several types of long-term care insurance available, although it may be expensive. “And there are many ways to plan your estate so there is money available in your later years to afford care if you cannot perform daily activities of living or have cognitive issues.”

6. Organize, communicate, update

Make sure your documents are organized to help those who will handle your affairs. Cody advises creating a “kick-the-bucket file.” “Hopefully, it will motivate you to realize that being organized is crucial if you want your trusted executor/power of attorney to be able to execute your intentions effectively and efficiently,” he says.

Discuss your wishes with your family and friends. Tell your personal representative or executor where to find your estate planning documents, as well as a list of your digital assets, your passwords, and the keys to your house and car.

Finally, review your estate plan once a year or as your life changes. Be sure that all beneficiary designations on your life insurance, retirement and bank accounts reflect your current wishes and circumstances. Remember that these designations will override how your will or trust distributes your assets.

Cody recalls one instance where a 401(k) had to be distributed to an ex-wife of a deceased employee. “It didn’t matter that the employee had remarried.”