Today, more and more people are delaying marriage for a variety of reasons, whether it be to become more established in their careers, pursue other interests, or that they simply do not want to get married. While many people believe they do not need to have an estate plan because they are not married or do not have children, this is not the case.
In fact, without a plan, the state’s intestacy laws will determine how any assets, such as bank accounts, securities, real estate and other assets, will be distributed upon death. In addition, the laws of intestate succession depend on whether or not the single individual had children. Moreover, if there are no children and no other living relatives can be found, the state will go to the state. Fore these reasons, it is essential for single individuals to have an estate plan.
The most basic estate planning document is a will which determines how assets will be managed and distributed. Moreover, a will is the only way in which guardians for minor children can be named, which makes having a will crucial for single parents. This estate planning document also designates an individual, known as a personal representative or executor to probate the will ad distribute assets to the beneficiaries. When selecting an executor, it is crucial that this person be capable and trustworthy. While it is common to name a close relative or friend, another option is to designate an attorney to act in this capacity. Having a will does not avoid the probate process, it simply notifies the probate court what an individual’s wishes are with respect to the management and distribution of the assets.
The probate process, even with a will, in California is public, lengthy, and will likely be costly. Furthermore, legal costs that are paid to probate attorneys and the court are designated by statute based on the size of the individual’s estate. The amount of work, or little thereof, that an attorney does during the probate process does not lessen their fees. However, an attorney may be entitled to collect fees above the amount designated by the statue.
There are a number of ways to avoid probate in California, (1) establish a Trust, (2) keep the amount of assets at the time of the individual’s death under the Small Estate Affidavit limit, which is currently $184,500.00, or (3) if the individual is over the Small Estate Affidavit limit (ii) have designated beneficiaries of the asset(s) (e.g., a financial account that is a Payable on Death account with a designated beneficiary) or (ii) hold the asset(s) in joint tenancy with other owner(s), for the amount that is over the Small Estate Affidavit limit.
The key is that when an individual dies their assets have a place to go on their death if they are over the Small Estates Affidavit limit. If there is Trust, then the Trust states where the assets go, and any conditions with regard to distribution. A Trust allows the most flexibility and control over distribution of an individual’s assets. If there is a designated beneficiary or if the asset(s) are held in joint tenancy, then the asset(s)’ ownership transfers automatically to the beneficiary or the surviving joint tenant(s), on the individual’s death. Two things to keep in mind, the first is that if the individual would like to name a designated beneficiary, the account or asset is legally allowed to name a designated beneficiary (not all accounts have that option), and the second is that the individual wants to avoid having assets over the Small Estates Affidavit limit that do not legally have a place to go on their death. If the individual’s asset(s) are over the Small Estate Affidavit limit and do not legally have a place to go (i.e., have a designated owner as a result of the individual’s death), then the assets must be probated, and the probate court directs where ownership of the asset(s) are transferred to, either in accordance with a Will, should they have one, or in accordance with the laws of intestate succession.
In addition to creating a trust and/or a will, it is also important for single individuals to plan for the possibility of becoming mentally or physically incapacitated. A durable power of attorney is a legal document that designates a trusted person, either a family member or close friend, to manage an individual’s personal and financial affairs, including bank accounts, real estate, and investments.
Moreover, an advance medical directive, or healthcare proxy, that designates someone to make decisions about a single person’s preferences for medical treatment when he or she is unable to communicate these decisions. Finally, if there are any retirement plans such as a 401(k) or life insurance policies in place, it is important to ensure that beneficiary designations are up-to-date and coincide with the estate plan.
In the end, everyone needs an estate plan, whether they are single or married. By having the advice and counsel of an experienced estate planning attorney, you can create a plan to ensure that your wishes are carried out.
By: Roy Schneider, Esq.