Although a lot of estate planning advice is written for people who are married and have multiple kids, this is obviously not everyone’s situation. Last week’s post covered a number of estate planning needs of individuals who are not married, and I will continue writing about that today.
It’s important for unmarried individuals to think carefully about who will be executor of their estate and make sure to discuss this role with that person to make sure they are ready to take on that responsibility. Otherwise, the person appointed executor may be someone you would not want to fill the role.
For assets such as IRAs, retirement plans, annuities, life insurance, and others for which you can name beneficiaries, be sure to complete beneficiary designation forms, keep copies of these forms safely storied, and update these forms when needed. You’ll also want to let beneficiaries and your estate executor know about these decisions and where these documents are kept.
Although people who are not married can’t use the marital deduction to reduce estate or gift tax, you can use the annual gift tax exclusion, the unlimited exclusions for gifts of education and medical expenses, and the individual lifetime estate and gift tax exemption to avoid gift taxes on lifetime gifts.
The annual gift tax exclusion ($15,000 in 2021) can be used to make gifts to anyone, including nieces, nephews, friends, relatives, or anyone else whether they are related to you or not. It’s often a good idea to make these gifts early as long as you are able to maintain sufficient assets to support your standard of living.
People who are unmarried and without children often prioritize charities and may make a chosen charity their significant primary or contingent beneficiaries of their estate. Otherwise, it may happen that a lot of their estate instead goes to distant relatives. Charitable remainder trusts, charitable gift annuities, and similar strategies can also be useful.
Unfortunately, Social Security does not allow designation of a beneficiary and only allows a spouse, former spouse, and children to benefit from your earnings record. Employer pension plan annuities often have similar restrictions as well.
If an unmarried person is supporting someone and wants to continue to support them after death, they can do so by buying life insurance or leaving assets to that individual.
Finally, seniors who are not married may need to update their estate plans more often as their situations might change more frequently. Be sure to keep beneficiary designations for IRAs and other financial accounts up-to-date.
The population of unmarried people is increasing and has unique estate planning challenges. It’s especially important for these people to work with an estate planning expert who will learn and understand their unique situation in order to create the best plan for them.
For assistance creating or updating your estate plan, contact us at Wilson and Wilson Estate Planning and Elder Law, LLC at 708 482 7090 for our main office in LaGrange, Illinois or at 847 656 8958 for our Northbrook, Illinois office.