Estate planning for single women can be challenging if you simply don’t know where to begin. This is understandable, but at the end of the day, the process is the same for everyone at its core, and there are variations based on the circumstances.
Let’s look at the basic foundation of an estate plan to demystify estate planning for single women.
Simple Will
The first order of business is to assert your wishes regarding the way you want your assets distributed after you pass away. Many people equate estate planning to the creation of a will, but this is not your only option.
It is important to understand the estate administration process when you’re making choices. A will is admitted to probate, which is a time-consuming and expensive legal process. This procedure is public, so interested parties can dig into the details.
Plus, there is no asset protection, and there are no spending safeguards for the beneficiaries going forward.
Revocable Living Trust
If you were to use a revocable living trust instead of a will as an asset transfer vehicle, these drawbacks vanish. You’d be the trustee while you’re living, so you would maintain complete control of the assets in every way.
When you draw up the trust, you name a successor trustee to assume the role after your passing. This trustee could also be empowered to manage the trust in the event of your incapacity.
After you’re gone, the trustee would distribute assets to the beneficiaries according to your stated wishes. There would be no court involvement at all, so this is one of the major benefits.
Upon your passing, the trust will become irrevocable, and the principal will be protected from the beneficiary’s creditors. When you establish the trust, you could instruct the trustee to provide limited distributions over time to prevent reckless spending.
Additional Considerations
Even if you have a living trust, if you’re the parent of a minor child, you should use a will to name a guardian. Your plan should also include a pour-over will, even if you have no children. This will direct assets that were in your personal possession at the time of your passing to the trust.
Other Types of Trusts
Other types of trusts can be used to satisfy targeted objectives. For example, let’s say that you want to leave an inheritance to someone with a disability. They rely on Medicaid and Supplemental Security Income, which are need-based programs.
An improvement in financial status can cause a loss of eligibility for these means-tested benefits. As a response, you could make the person in question the beneficiary of a supplemental needs trust.
The trustee would be able to use the assets to enhance the beneficiary’s quality of life, but government benefit eligibility would not be impacted. This is just one of the many tools in the estate planning toolkit.
Incapacity Planning Component
Your plan should extend beyond financial matters. Over 30 percent of the elderly have contracted Alzheimer’s disease, and this is not the only cause of incapacity. With this in mind, your plan should address this looming possibility.
As we have stated, a living trust can be useful for incapacity planning purposes, but there is more. For assets that are not held by the trust, you can name an agent in a durable power of attorney for property.
A living will should be part of the plan as well. This document is used to state your life-support preferences.
For medical scenarios that are not related to life-support utilization, you can name a decision-maker in a health care power of attorney. To give the agent access to your medical information, you can add a HIPAA release.
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