Approximately half of America’s population over the age of 16 is unmarried. While much of the discussion involving estate planning focuses on married couples, this topic is just as important for a single person. In fact, many times it is even more important that a single person have a well-coordinated estate plan. This is because the default laws governing estates often work poorly for people without a spouse and may not adequately provide for a significant other or unmarried partner. Having a cohesive and well-drafted estate plan will ensure that you protect and provide for those you truly care about upon your death.
Evolving Estate Planning
It is important to understand that your estate plan can change over time. You may eventually experience life changes like getting married, having children, or buying your first home that will necessitate changes to your estate plan. Although life is constantly changing, it is best to get in the driver’s seat early when it comes to estate planning.
If you die without a will -- referred to as intestate -- all of your possessions will be distributed according to California’s default laws. While a married person’s assets go to their surviving spouse and children, the same is not true for unmarried individuals. Generally, a single person’s assets are passed on to their next of kin. This includes children, parents, and siblings. Noticeably absent for many unmarried people are provisions providing for a long-term boyfriend or girlfriend. And, if there are no surviving close relatives, the assets will likely go to the state. To avoid the state dictating what happens to your assets, it is vital that you have a properly drafted estate plan put together.
As an Unmarried Person, How You Own Things Is Very Important
There is an increasing number of couples that are not getting married, and other individuals who are deciding to remain single. For this group, estate planning is important because taxes and other financial benefits tend to favor those who have tied the knot. It also brings up the need to be very careful about how assets are titled.
How your assets are titled and how the beneficiary designations are prepared will impact how your assets will be distributed upon your passing. The most common ways to hold title to property is tenants in common (TIC) and joint tenants with rights of survivorship (JTWROS). Property that is held as TIC means that each owner owns an interest in the property. At the death of one owner, that interest is transferred according to his or her estate plan, or intestate succession if there is no estate planning. This is not an ideal way for unmarried couples to own property because at the death of one of them, the other person will end up as joint owner with the deceased’s next of kin. JTWROS is one option for unmarried couples because when one owner dies, the property automatically transfers to the surviving owner.
Keep Things Streamlined with a Trust
There are many pitfalls, however, with relying on titling alone to transfer your assets to you intended beneficiaries. What if your intended beneficiary predeceases you and you neglect to update the title to your assets with a new beneficiary? Often this results in a lack of beneficiary and that asset must be probated. In addition, many forms of holding title only allow for naming individuals instead of classes of beneficiaries (like “children”, “nieces and nephews”, etc.). In these cases, you risk disinheriting an important member of the class. This kind of planning also does not work well for minor beneficiaries (under age 18 in California). A minor generally cannot manage property, so a Guardian would have to be appointed by the probate court to manage the asset(s) until that child reaches the age of majority. With a Trust, you can make detailed arrangements for the management and distribution of all of your property to your beneficiaries without court supervision. This includes the ability to name successor beneficiaries should any of your intended beneficiaries predecease you.
A Holistic Approach To Your Planning
There are several other planning documents that can be beneficial for unmarried individuals – including Advance Health Care Directives and Durable Powers of Attorney. These documents allow you to pick someone (such as a significant other or unmarried partner) to manage your personal care and finances if you become incapacitated and can no longer manage these things yourself. The Advance Health Care Directive also allows you to detail your preferences as to day-to-day care and emergency medical procedures.
Speak to an Estate Planning Attorney
A qualified estate planning professional can help you craft a comprehensive plan that is tailored to your personal situation. If you do not have an estate plan yet, we can help. Give us a call today.