Estate Planning for the Single Person

Many single people (young and old) think that estate planning isn’t something that they need.  Most often, they assume that their family members will share in their estate, and that their family members will be able to help out if something happens and they can’t act for themselves. 

Unfortunately, this kind of thinking can get the young and the old in trouble.  Regardless of your assets, once you are 18 years old, your family loses the ability to make decisions for you without your consent or authority to make those decisions.  It is therefore supremely important to have a power of attorney and health care power of attorney drafted that appoints someone to make financial and medical decisions for you in the event you are unable to make them for yourself.  This applies to the 20 year old in college just as much as the 75 year old enjoying retirement.  A lack of a power of attorney or health care power of attorney can result in increased legal costs due to the need to pursue guardianship in the event of incapacity or incompetence.

For the single person with assets, a will is of supreme importance.  If you die without a will, the State of North Carolina has drafted will provisions for you, in the form of “intestacy”.  Intestacy is when a person dies without a will.  You are considered to have died “testate” if you die with a will. 

Let’s say Steven is 28 years old.  He is not married.  He’s been working since he graduated from college and has a home, a nice cushion of emergency funds, his car that he just paid off, and a retirement account. 

On the way home from work one night, Steven gets broadsided by a pickup truck that ran a red light.  He is in a coma for eight weeks, and at the end of eight weeks Steven comes out of the coma and begins the hard work of rehabilitation. 

During this time, however, Steven’s financial life has not stopped.  His mortgage and bills continue to come due and require payment so that the things that Steven has worked for are not lost.  Let’s assume that Steven has done no estate planning.  How do his bills get paid?

Chances are Steven has not listed his parents on his checking and savings accounts.  Those are the only two locations that hold Steven’s money.  Steven’s father cannot write and sign checks on his son’s behalf without authority.  Steven is clearly unable to execute a power of attorney.  At this point, the only option is to have Steven declared incompetent in a court proceeding, and have his father appointed his guardian.  This is an expensive and time consuming process that requires court approval at nearly every step and allows very little flexibility.  However, it would give Steven’s father the necessary authority to access Steven’s accounts and pay Steven’s bills. 

But what about health care decisions?

During the eight week period that Steven is comatose, medical decisions still have to be made.  Assuming again that Steven has done no estate planning, who makes his medical decisions?  The State of North Carolina says that Steven’s parents would make that decision, but it requires both of them to agree on treatment (N.C.G.S. §90-21.13(c)(4)).  Perhaps this is what Steven would want, but there is no way to be sure without a health care power of attorney in place.  It also presents a problem if the parents do not agree on certain treatment options.  Such a situation could result in a battle between the parents regarding guardianship of Steven’s person (in layman’s terms, the person who makes decisions regarding Steven’s health care), which would simply make a bad situation worse. 

Let’s assume that at the end of eight weeks, the doctors tell Steven’s parents that there is no brain activity and that he is not going to recover.  They ask his parents what they want to do.  His mother wants to keep him on life support; his father feels that it is time for them to let their son go.  What happens now?

In the absence of an advanced directive (also known as a “living will” or a “declaration of desire for a natural death”) or a health care power of attorney giving someone the authority to make end-of-life decisions, North Carolina statutes dictate who makes those decisions.  Again, the statute in question requires that for life-prolonging procedures to be withheld, both of Steven’s parents will have to agree.  With neither parent agreeing, we run the risk of both parents seeking to be appointed guardian of Steven’s person to make final decisions – a course of action that cannot end well. 

Finally, let’s assume Steven has passed away, and never executed a will.  How will Steven’s estate be distributed?  North Carolina’s statutes set forth the distribution of the estate of a single person with no surviving issue (“issue” being a fancy word for blood descendants) – and it says that Steven’s assets will go to his parents (N.C.G.S. 29-15(3)).  This may have been Steven’s desire – but without estate planning he won’t have a say.

For younger single people, the distribution may not be a primary concern – but it can be for those with charitable inclinations or close friends they wish to provide for in some manner.  Without a will, such a person would not be able to direct those funds to their favorite charity or best friend.  The important thing to keep in mind is that, in the absence of planning, your parents or your siblings will end up being your heirs. 

However, the distribution of an older single person’s estate via the statutes is often not as clean or as acceptable.  In many such instances, an older single person’s parents have passed away, meaning that their estate will be distributed to their siblings or their nieces and nephews (and so on).  Again, this may be as the person would desire.  However, with older siblings there are issues to consider: is the sibling on Medicaid?  Making them a beneficiary (either via will or by intestacy) could result in disqualification for Medicaid and loss of the assets.  Are there nieces and nephews with money issues or special needs that should not receive assets outright?  Is the single person charitably motivated?  All of these issues need consideration – and they need to be examined by an experienced estate planning attorney. 

Getting back to Steven – what would the outcome have looked like with basic estate planning?  Much cleaner and question free.  With basic estate planning like our office provides, Steven would have executed a power of attorney and health care power of attorney that would have appointed someone to deal with his finances and make his health care decisions.  This would have allowed Steven to decide who he trusted to serve in those positions, as well as giving him the opportunity to talk with that person about his wishes and desires regarding his property and his health care.  He would also have executed a living will, making known his desire to not be kept alive via extraordinary means (if he so desired).  This would have eliminated any possible disagreement between his parents.  Finally, he would have executed a will that set forth specifically how he wanted his estate distributed – ensuring that his wishes were carried out.  The same goes for an older Steven – basic estate planning would ensure that his estate was distributed as he desired – while taking into account the situations of his siblings and nieces – thereby eliminating any possible Medicaid or spendthrift issues.

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