If you're not married, do you really need an estate plan? In Minnesota, many people believe that a will isn't a necessity because we are one of the states that have "Informal Probate" - a streamlined process for dealing with the Probate Court when someone dies. So, if that's your rationale for not needing a will, I've got to provide you with a quick warning: without proper estate planning, your estate may not be eligible for Informal Probate. In the case of people with an estate plan, they often have a provision in their will that specifically chooses Informal Probate for their estate. But without it, your estate may not qualify for it and you're leaving behind a total mess for your family to sort out.
So the easiest way to avoid this? Create an estate plan.
What Documents Are In An Estate Plan?
If you aren't sure exactly what an estate plan is, there's no reason to be ashamed. I've read that only 33% of people in the United States have an estate plan, even though 74% said they would create an estate plan if it would lower their taxes (which it certainly can). So no matter where you find yourself on that spectrum, let's look at some of the common documents in an estate plan:
- Last Will and Testament ~ the document that says what happens to your things after you die.
- Healthcare Power of Attorney ~ If you become incapacitated, and you're unable to speak for yourself, that document appoints somebody else to make legal decisions for you when it comes to your health care.
- HIPAA Authorization ~ Whoever your healthcare agent is who's making medical decisions can have access to your medical records, and you want them to be informed before they make some of these big decisions.
- Durable Power of Attorney ~ Like the healthcare power of attorney, this comes into effect when you're unable to manage your finances. In this case, you're appointing somebody else to make a financial decision for you. Now, if you've ever purchased real estate before, you've probably run into this as well. Let's say you're unable to attend a real estate closing, many states will allow you to use a power of attorney so that somebody else can sign the paperwork on your behalf.
- Guardianship Designation ~ If you're not married and you have kids, it's especially important if they're under 18 to have a guardianship designation so that if something happens to you, there's somebody there who can take care of the kids while you are incapacitated.
When we look at those documents, hopefully you can see why, if you're not married, it's important that you go through these documents and see which one works for you.
The first area we want to look at are your healthcare documents. If you're not married and something happens to you and you're in the hospital, who's going to make those decisions for you if you're not able to speak for yourself? If you're married, it's easy. The doctor will say "Well, where's the spouse? We'll talk to them." However, if you don't have a spouse, the doctor or the hospital doesn't know who to talk to. A healthcare power of attorney with the HIPAA authorization will tell those doctors, will tell that hospital, will tell whoever you're working with, this is the person that you chose to make those medical decisions for you if you're unable to speak for yourself.
The second consideration is your Last Will and Testament. If you don't have a spouse, who's going to get your stuff? If you're a single person and let's say you don't have any siblings, what you're doing is you're leaving behind a puzzle for your local probate court to figure out. Your local probate court has to do a whole family tree and figure out who is the closest relation to you and figure out who will inherit your things. And when they're doing that, they have to find somebody to manage the estate, the personal representative or the executor depending upon what state you're in. And that person has to then be involved with the court and wind up your assets and distribute them. Well, if you don't have any family around and the court doesn't know who it is, who are they going to find to be that person to manage it?
And if you have children who are under the age of 18, you definitely want to have a will because you want to make sure you have the right person designated to be their guardian and another person and it could be the same person designated as the trustee to manage any money that the children inherit. If they're under 18. They can't inherit the money directly so the trustee can help manage that money for them.
Finally, your durable power of attorney. This goes back to your finances. So if something happens to you and you're unable to pay your bills, you're in the hospital you're not able to make financial decisions, that durable power of attorney will allow you to choose somebody to be able to manage your finances while you're unable to do so.
You want to make sure that you have a plan laid out in case something happens to you. Now if you don't have anybody to talk to or you're ready to get started with an attorney, let's set up a Legal Strategy Session, it's about 15 to 20 minutes where we'll go through your situation, what your goals are and give you some next steps so that even if you're single and you don't think you need an estate plan, at the end of that session, you'll realize why you do.