Estate Planning For Single People

Even if you are single, you can still take steps to plan for the future. For that reason, estate planning for single people is almost a necessity. Even if you don’t have a significant other or children, you can find ways to pass your assets to those most important people or organizations in your life. If you would like to learn more about getting a plan in place for your estate, contact Loughlin Law, P.A. You can schedule an appointment by calling 561-677-8384.

What Is the Best Trust for a Single Person?

Estate planning involves transferring assets and property per the American Bar Association. One way to manage that is through a trust. Choosing the right one for your needs will depend on your future goals and individual circumstances. Some of the trusts you may want to consider can include:

Revocable Trust

Some individuals may refer to these trusts as living trusts. They can be created during the person’s lifetime and changed at any time. Along with that, a single person can name themselves as the trustee. They will be able to have control over any assets placed in the trust. At the trustee’s death, a successor trustee can manage the transfer of these assets.

Irrevocable Trust

These trusts are not as easily modified as revocable trusts. Once the assets are placed in the trust, the grantor who establishes the trust will give up more control. When the grantor passes away, however, the trust assets will be protected against most creditor claims and not subjected to estate taxes.

Charitable Remainder Trust

If a person wants to leave some or all of their assets to a charitable organization, rather than to individual friends and family members, they may want to set up these trusts. The person will transfer their assets to a selected organization or charity.

Specialized Trust Options

Along with these trusts, other options exist, such as special needs or testamentary trusts. If you want to find a trust to meet your needs, consider contacting the legal team at Loughlin Law, P.A.

What Are the Disadvantages of Estate Planning?

While there are many benefits to having an estate plan in place, there are also a few hurdles to overcome. These may include:

Cost

Estate planning can be a little costly. Sometimes, the initial fees can range from the hundreds to thousands of dollars. In addition, there may be:

• Reoccurring administrative fees
• Tax preparation fees
• Trustee fees
• Legal fees

Over time, these costs can constitute a substantial added expense for the estate planner.

Time-Consuming

Creating an estate plan is an iterative process with multiple steps and periodic revisitations. During the initial process, the planner will need to gather legal and financial documents while making important decisions regarding beneficiaries and assets. The process can in many cases be time-consuming, especially for those with large estates or complicated financial issues.

Complex

Trusts and other estate planning tools can be difficult to understand for many people, especially those without financial or legal backgrounds. Individuals preparing a comprehensive estate plan will need to keep detailed records. They may also need to familiarize themselves with state and federal guidelines for a variety of financial and estate planning matters in order to ensure their plans adhere to strict regulations.

Limited Asset Protection

While trusts are among the most flexible and customizable estate planning tools and some trusts do offer significant asset protection, the degree of protection they afford can vary widely depending on the type of trust involved. For example, with revocable trusts, these assets are not protected. If the grantor is sued for debts, then the assets in the trusts could be used to pay off any judgments. Estate planners should not assume that establishing a trust, by itself, constitutes a comprehensive estate plan, and some estate planners may wish to explore additional options, which can add to the complexity of the overall planning process.

Potential Tax Burdens

Trusts and other estate planning tools can carry potential tax burdens. If the assets in a trust place the individual in a higher income bracket, they may need to pay more taxes. Plus, when the assets are passed to beneficiaries, they may also need to think about those tax considerations. Assets passed on through a Last Will and Testament may also be subject to a variety of state and federal taxes, depending on the circumstances.

Irreversibility

Often, a person cannot reverse certain actions with an estate plan. For example, placing assets in an irrevocable trust cannot be easily changed. For singles whose estate planning goals and personal priorities may change substantially in the future (for instance, through finding a partner or adopting a child), maintaining flexibility for the next stage of life may take precedence over the security of an irrevocable trust.

While these potential disadvantages may seem disheartening, the cost of not having an estate plan can be much higher. A carefully-tailored estate plan helps to ensure that your wishes for the distribution of your assets will be carried out once you are gone, and could spare loved ones a lengthy and expensive probate process.

Who Should Be Your Beneficiary if You Are Single?

Estate planning for single people works in much the same way as for married and partnered individuals. The major difference is that single people may not have a “default” beneficiary (usually a spouse) or person to authorize as Power of Attorney (POA). . On the other hand, the absence of a presumptive beneficiary and POA can mean that estate planning for singles creates a space for considered reflection about who should receive each asset, and why. While the choices are as unique as the estate planner, some common selections include:

• Family members, including parents, siblings, or cousins
• Close friends
• The planner’s alma mater or another institution
• Charitable organizations

Even if you name one or more beneficiaries in your will, circumstances can change over time. For that reason, many people will want to review their estate plans to make sure their assets pass to the right person or organization.

What Are the 3 Main Priorities You Want To Ensure With Your Estate Plan?

Priorities, like beneficiaries, are a matter of individual choice. In general, however, these three considerations rank high on most estate planners’ lists:

Distribute Assets According to Your Wishes

An estate plan’s primary objective is to ensure that the planner’s assets are distributed according to their wishes. According to the American Bar Association, most individuals should have a will to assist with the distribution of assets after their deaths. The will should address everything from real estate and financial accounts to personal belongings. An estate plan founded on a meticulously drafted will can avoid potential disputes between beneficiaries by clearly outlining who should inherit them.

Minimize Taxes and Fees for Your Loved Ones

An estate plan can help minimize the estate taxes beneficiaries might have to pay. Depending on how the estate plan is structured, it may also help avoid probate, a lengthy and sometimes costly legal process that can eat into the value of an estate.

Plan for Incapacity

An often overlooked aspect of estate planning is planning for potential incapacity due to an accident or illness. An estate plan can arrange for someone to manage the planner’s financial and personal affairs in the event of incapacity. Additionally, a healthcare power of attorney can make healthcare decisions on the agent’s behalf if they are unable to make or communicate their own decisions. Keeping these three key priorities in mind can help to create an estate plan that will allow you to pass your assets to the next generation.

Reach Out to a Florida Estate Planning Attorney

Estate planning for single people is just as important as it is for married couples or individuals with children. Singles can use estate planning to protect their assets and pass their wealth to parents, siblings, organizations, or even an alma mater. If you have questions about your estate plan, consider scheduling an appointment with an estate planning lawyer at Loughlin Law, P.A. by calling 561-677-8384.