When I talk with people who aren’t married and don’t have kids, estate planning is usually the furthest things from their minds. And yet, in some ways, it is even more important for these individuals to have an estate plan. Here are the five of the biggest myths for people in this situation.
1. I don’t own a home, so I don’t need a will.
Wrong. Many people presume that because they don’t have one large asset, they don’t have anything of value to pass along. What many people forget is that they have other investments — retirement accounts, savings bonds, stock or mutual funds, etc. While it may not be millions, it is worth thinking about what you want to happen to those assets after you pass. Do you have a nieces and nephews that you want to see attend college? Do you have charities or organizations that you want to support with bequests from your estate? Do you have a sibling with special needs who could use some extra care through a trust for their benefit? The only way to insure that your assets are used to support the people and organizations that you love is through estate planning.
2. So I have a few assets, but it’s still not much. I’m sure my extended family can figure out something fair.
The truth is that everyone has an automatic estate plan provided by the government (See RCW 11.04.015). If you die without a will, your assets will be distributed to your next of kin according to the laws of intestacy. Intestate means “without a will.” And it gets complicated pretty quickly. For someone who is not married and does not have children, your estate goes to your parents. If your parents are no longer living, then it goes to your siblings. If you don’t have any siblings, then it goes to your parents’ siblings (your aunts and uncles), and then to their kids (your cousins), and so forth. What if you come from a blended family? Well, your half-siblings count as siblings, but your step-siblings probably do not unless they were legally adopted (same deal for step-parents). Eek.
But let’s keep going! Let’s say that you are survived only by your sister, and by your brother’s two kids. Guess what? Your estate won’t be divided into three equal parts. Rather, your sister will get 50%, and your niece and nephew will get 25% each (equally splitting the 50% that would’ve gone to your brother). Complicated, right?
While the division provided for under the statute may be “fair,” it may not be equitable and it can cause a fighting and hurt feelings for your family. Now think: is this really what you want to happen with the funds in your retirement account if you don’t get to use them?
3. I get it. I need a will. But I don’t need a fancy “estate plan.”
A basic estate plan consists of 4 documents: a will, a power of attorney for health care decisions, a power of attorney for finances, and an advanced directive.
The power of attorney grants someone the ability to make decisions on your behalf if you are incapacitated (or, for finances, unavailable). These are two of the most important documents that every single person needs. For married couples, the default is that your spouse will make health care decisions for you if you are incapacitated. But for unmarried people, the power passes to your adult children, then your parents (if alive), then your adult siblings, and then their kids, and so forth. Are those the people you really want making these kinds of decisions for you? Or would you rather pick a dear friend?
Similarly, a power of attorney for finances allows someone you trust to access your financial accounts if you are incapacitated (for example, in a medically-induced coma following a car accident) or unavailable (for example, when your wallet and passport are stolen while you’re traveling in Brazil). This person can do things like wire money to you while you are abroad, or simply pay your rent and bills so your apartment is still home when you are released from the hospital. The biggest benefit here is that, unlike a cosigner, the person with power of attorney for finances won’t get mixed in to your credit ever. You are totally separate, but with access in case of an emergency.
Lastly, your advance directive is a statement about which end-of-life treatments you do or do not want. While your power of attorney for health care is the one who consents or revokes consent to treatment, this document is a guide to help them follow what you would want. It is a gift for the people who love you, to spare them from trying to figure out what you would’ve wanted.
4. That all makes sense… for someone who’s old! I just turned 18! I don’t need to think this yet.
When I left home for college, my mom cosigned on my first checking account. At the time, it seemed prudent — she could check-in on my finances and help me move funds around more easily. In retrospect, this was a terrible idea. What if I had signed up for a bunch of credit cards and racked up a lot of debt? She (and my father) could’ve been on the hook for that debt too, and it could’ve affected their credit score. Luckily, I didn’t, but I will never cosign on my kids’ bank accounts so long as a power of attorney for finances is available.
Similarly, while we don’t like to think about it, accidents happen in college. In fact, the leading cause of death for people ages 15-24 in 2017 was unintentional injury (for example, car crashes, poisoning, drowning, etc). While a person in this age range may not have substantial assets, it is a chance for him or her to articulate what should happen with those assets, as well as explaining end-of-life preferences.
5. I think I will do this… but I don’t think I need an attorney to help me.
This one is tricky — because there are a lot of things you can do by yourself using self-help resources available on the internet. The American Bar Association recommends hiring an attorney if any of the following circumstances are true for you:
1. Complications with previous marriages, divorce, or blended families.
2. You (or your spouse or children) have international citizenship.
3. You own or have interest in property in another state.
4. Your assets exceed a certain amount (this varies state-to-state and changes each year. In Washington, right now, it's $2.129 million, and that includes real estate and life insurance).
5. You (or your spouse) are getting married and could have complications with trusts, property ownership, or guardianship for your minor children.
But this is a list of estate planning mistakes for unmarried people without kids — and most of those reasons won’t apply. So why is it a mistake to do it yourself?
Well… because you probably won’t do it.
According to a study reported on by the AARP, 6 out of 10 adults in the United State do not have an estate plan. If you’re under the age of 54, that percentage is even higher (72% of people over the age of 73 and 58% of those between 54-73 have an estate plan).
Every estate planning attorney has a story or 20 about the almost-client who decided to write their own will. When we run into them years later, the first thing they say is “I still haven’t written my will.” Yes, we know. Most people do not write their own will.
So if you are going to write your own, try giving yourself a deadline by when you will write it or hire an attorney to help you. The peace of mind and feeling of accomplishment that you will have when you are holding your signed documents is worth both the effort and the expense.