Estate planning is not often top-of-mind for people who are single. Those who are not single tend to think about estate planning more, if only because they are concerned about how their significant other and descendants will be taken care of upon death.
Even if you are single, though, estate planning should be an essential part of your plan for the future. That's because a defined estate plan will allow you to determine who receives your assets after you pass away.
If you don't have a will, your state's laws will ultimately determine who your assets are left to and how it will be done. It can also create a messy situation, as multiple potential beneficiaries could stake a claim to an inheritance through a process known as probate.
This is why estate planning in general is always a good idea, whether you are single or not.
The estate planning strategies for singles will typically look different than that for those who aren't single. Below, we'll provide answers to some common questions that singles may have about estate planning strategies.
Can a Single Person Form a Trust?
Trusts are often used in estate planning for a variety of reasons. They can be used by single people and by married couples, though they are often used for different reasons. Single trusts are used by only one individual, while joint trusts are used by more than one -- often married couples.
In general, a trust is a basic fiduciary agreement allowing a trustee to hold onto one's assets for a stated beneficiary or multiple beneficiaries. Trusts do this in a number of different ways, depending on the type of trust that is selected and how it is written.
Should Single People Have a Trust?
Single trusts don't always benefit from the exact tax benefits that joint trusts do, but there are many reasons why a single person should still want to have a trust as part of their estate planning strategy.
First and foremost, having a living trust will typically allow beneficiaries to avoid probate when you die. This gives them access to the assets you want to leave to them in a timely fashion. They also likely won't have to fight over what assets are rightfully theirs.
Single trusts could also operate outside one's taxable estate, meaning fewer taxes could be due when you die. This puts more money into the pockets of those you have left assets to.
Single trusts allow you to control the wealth you have built, protecting your legacy in the meantime. They allow your assets to be distributed in a timely fashion in the exact manner that you set out in your will.
What's more, single trusts help to prevent probate, which can protect your privacy and that of your beneficiaries. Since probate is part of public record, anyone could gain access to the matters included in it.
Who Should Be My Beneficiary if I Am Single?
One of the biggest questions that single people face when creating an estate plan is who to name as beneficiaries. Married people who have children have obvious beneficiaries -- their partner and their children.
If you're single, you have a number of options for naming beneficiaries. You have the freedom to choose a person or a group of people who are special to you. This could include siblings, nieces and nephews and cousins.
It doesn't have to be members of your family, though. You could also choose close friends, neighbors or colleagues. You really won't be limited to who you can name as your beneficiary. If you want to name a child who is a minor, you'll need to name a custodian who will manage the money for them until they become a legal adult.
If you don't have anyone you'd like to name as a beneficiary, you might consider giving your assets to charity. You can name non-profit organizations as the beneficiary of your estate. This could allow you to give back to causes that are near and dear to your heart.
One thing to note is that you can always change your beneficiaries over time. This gives you the freedom and flexibility to change your mind or alter who you want to leave all or part of your estate to as new people come into and go out of your life.
How Do You Write a Will as a Single Person?
There are a number of things that you need to gather and figure out before you write a will as a single person. You'll need to name an executor, who will be the person to handle distributing the estate once you've passed. You'll need to list all your assets -- both physical and financial property. You'll need to list any taxes and debts that your estate may need to pay upon your death.
You'll need to name beneficiaries, as previously discussed. And you'll need to list any other extenuating circumstances, such as who would take over the care of your pet if you have one.
Once you have this information, you can use an online form to fill out your will. You could choose to get the will notarized by a third-party, and then make sure to store it in a safe place that can't be damaged. Make sure to also notify your executor of where the will is to be stored and how they can access it.
Can I Make a Will without a Lawyer?
Technically speaking, you can make a will without a lawyer, whether you're single or not. There is nothing in law requiring you to hire a lawyer to do this.
However, there are many benefits of hiring an estate planning lawyer. An experienced estate lawyer will know the rules and regulations of the state in which you live, which is very important if you want to avoid making a mistake. One small mistake in writing your will could invalidate it altogether.
An estate planning lawyer will help you understand all of your options as a single person and ensure that your wishes are actually met.
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