Making important decisions for yourself and ensuring the proper care of your assets after your passing can be overwhelming as a single individual. Who will step in to handle matters if you become unable to do so? Moreover, who will inherit your money and property when the time comes?
While your parents or siblings may seem like natural choices, factors such as their availability and the nature of your relationship with them can make them less suitable options.
If you don’t make a choice, the court will intervene and, in line with state law, appoint someone to make important decisions on your behalf.
To ensure your proper protection, it’s essential to consider a couple of things and make the necessary arrangements for your peace of mind.
1. Agent under a Financial Power of Attorney
In a financial power of attorney, the agent is the person who handles your financial tasks, like signing checks or opening a bank account, on your behalf. If you don’t have a family member or trusted friend to handle your finances, you can also hire professionals to provide assistance.
The financial power of attorney document specifies the agent’s authority, including the duration and extent of their responsibilities. It’s crucial to choose a responsible agent who can keep accurate records of the financial transactions they perform for you and has enough time to dedicate to the role.
2. Agent under a Medical Power of Attorney
Similar to a financial power of attorney, it’s important to have someone you trust to make medical decisions on your behalf. By creating a medical power of attorney, you get to choose this person instead of leaving it up to a judge.
It’s crucial to select someone who will respect your wishes and be available to make or communicate medical decisions for you. If you don’t have a trusted family member available, you can consider a close friend or a reliable professional. However, keep in mind that certain professionals, like doctors, may have limitations based on state laws.
3. Choosing the Right Beneficiaries
Without a designated beneficiary, your money and property will go to your estate, leading to the probate process and its associated costs and delays. This also applies to your life insurance policy and retirement account.
The best way to prevent this situation is through a comprehensive estate plan. It will ensure that your assets are distributed according to your wishes and avoid unnecessary complications.
4. Proper Tax Planning
When one spouse passes away, married couples can benefit from the estate tax marital deduction. This allows them to transfer money and property to the surviving spouse without incurring any taxes. Additionally, the surviving spouse can combine their own exemption amount with any unused portion of their deceased spouse’s exemption amount.
For single individuals, you only have a lifetime exemption, which is the amount of assets you can pass on without facing estate taxes ($11,700,000 in 2021). There’s also an annual exclusion amount ($15,000 in 2021) for gifts you can make each year without triggering gift taxes. If you have significant wealth, it’s important to consider tax planning earlier, as it may involve more complex strategies.
How estate planning can help singles
Singe individuals may encounter the issues above, but you can still take charge of your future and secure your legacy by creating an estate plan tailored to reflect your desires. You can provide clear instructions for how you want things to be handled during your lifetime and after your passing. Contact us today to discover how we can assist you in protecting your legacy.