The Importance of Having an Estate Plan as a Single Person
When people think about estate planning, it is often pictured as something only married couples with 2.5 children, 2 dogs, and a sprawling estate with a white picket fence consider. In reality, it is something single and unmarried individuals can also explore, but this planning becomes even more critical because of the lack of a "default" decision-maker like a spouse.
Whether you are early in your career, approaching retirement, or anywhere in between, creating a thoughtful estate plan is an essential step towards protecting yourself and the assets you've worked hard to build. It allows you to appoint someone to handle your affairs quickly and privately rather than dragging personal matters through public probate proceedings. It also helps to protect your estate from avoidable taxes and legal fees.
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At its core, estate planning is not only about who inherits your assets when you pass away. It is also about ensuring that your medical, financial, and legal affairs are handled according to your wishes if you become incapacitated. Without a formal plan in place, your fate could end up in the hands of a distant relative you barely communicate with, or a court-appointed guardian.
Crafting an estate plan grants you the ability to choose the person(s) who will act and speak on your behalf if you are ever unable to. Having Durable Power of Attorney, Healthcare Proxy, and HIPAA Release documents on hand ensures that the individuals you trust have both the legal authority and the necessary access to manage your financial affairs, make informed medical decisions, and communicate with your healthcare providers.
Without these documents, even your closest family or friends could face significant legal hurdles in trying to advocate for you during a crisis. In some instances, the courts might even require your loved ones to petition for guardianship or conservatorship at a moment when time might be of the essence.
Another reason a single or unmarried person would want to have an estate plan is because the absence of immediate heirs does not eliminate the need for clarity when it comes to the distribution of assets. Without a plan, your assets will likely be distributed according to your state’s intestacy laws, potentially favoring relatives you may not have a solid relationship with, or worse, causing confusion and conflict among your immediate family members.
Left without clear guidance, even families with the best intentions can find themselves at odds during a contentious settlement proceeding. Emotions tend to run high when grief, money, and uncertainty collide, and disagreements over “who receives what” can quickly escalate into lasting divisions. By documenting your wishes explicitly, you remove the ambiguity that often sparks these disputes, preserving not only your legacy but also the relationships among the people you care about most.
Having a plan also allows you to control how and when your assets are used. You may want to leave money in a trust for a younger relative’s education, ensure the care of a beloved pet, or donate to a cause that reflects your personal values. Without a documented plan, these intentions may never materialize.
In the end, estate planning isn't just for the wealthy or those with a traditional family structure. It is an important step for anyone who wants to ensure that their assets are transferred according to their wishes, have their medical preferences respected, and spare their loved ones from unnecessary legal complications. For single or unmarried individuals, the absence of a spouse or direct heirs makes it even more crucial to articulate your wishes clearly and in writing.
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Malcolm Ethridge, CFP® is the Managing Partner at Capital Area Planning Group, based in Washington, D.C. He is also the Managing Partner of Capital Area Tax Consultants.
Malcolm’s areas of expertise include retirement planning, investment portfolio development, tax planning, insurance, equity compensation and other executive benefits.
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Disclosures:
The information provided is for educational and informational purposes only, does not constitute investment advice, and should not be relied upon as such. Be sure to consult with your legal advisors before taking any action that could have tax and legal consequences.
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