Estate planning is a complex process. One of the hardest parts of it is deciding how to distribute one’s assets. Individuals with no children may avoid having to determine which children or grandchildren receive assets. But it would be a grave mistake for individuals without children to believe that since they have no direct descendants, they don’t need to have an estate plan.
There are several reasons why it is still important to engage in comprehensive estate planning even if you have no children.
Determining Who is in Charge
An estate plan is far more than simply a plan for the distribution of assets. It often includes information about who will make decisions in the event of incapacitation. Estate planning generally includes designations, such as:
- A durable power of attorney for finances. This designation authorizes someone to handle your financial and legal affairs if you are unable to do so.
- A durable power of attorney for health care, which authorizes an individual to make medical decisions on your behalf and details the types of medical interventions you would and would not like to receive to keep you alive.
Without these legal documents, a court will appoint someone to make these decisions for you. Unfortunately, in some instances, this can be a distant relative who doesn’t know you very well and who may be ill-equipped to understand what your preferences are.
An estate plan also includes an executor or estate administrator. This individual will handle probate issues, distribution of your assets, management of the sale of property, and notification to creditors and financial institutions of your passing. If you do not have a close relative to serve in this capacity, you can select an accountant, an attorney, or a professional executor.
Planning for Your Assets
Many individuals without children manage to accrue a sizeable estate throughout their lifetime. Just because a person doesn’t have direct descendants doesn’t mean that they shouldn’t plan for who should receive the assets. Many people without children still have a sizeable extended family or social circle filled with loved ones. You can name beneficiaries who are dear to you, including parents, nieces and nephews, and beloved friends or significant others.
If you would prefer, leaving your money to charities is another option. You can provide charitable bequests that benefit causes that are near and dear to you in your estate plan. There are several options for charitable giving, such as:
- Charitable remainder trusts, in which the donor receives an immediate charitable deduction based on the present value of the cash or other property transferred to the irrevocable trust. The donor then receives an income stream from the trust for the remaining years of their life.
- Donor-advised funds, where the donor makes an irrevocable, tax-deductible contribution of assets.
- Private foundations, which accept charitable tax donations from donors. A board of directors or trustees generally manages these organizations.
These assets will go to your next of kin without an estate plan, as determined by the state. If no next of kin can be found, the assets become “unclaimed property.” They will be held by the state’s unclaimed property department until someone proves they have the right to inherit them. In nearly all cases, it would serve your interests well to have the assets go to the people and causes that meant something to you.
Ensuring Pets are Cared For
In addition to determining who should make decisions for you and developing a plan for your assets, you may want to designate a provider for your pet. For many people, pets become an important part of their life, serving as cherished family members. You can designate someone to take possession of the pets to ensure they do not end up at a shelter. You can also develop a trust with funds that should be used for the pets’ direct care.
Planning for one’s passing is a topic that can make some deeply uncomfortable. But it is up to the individual to decide what they want and who should receive their assets. Failing to create an estate plan takes this power away from the individual and gives the state discretion in making decisions or appointing others to make decisions on your behalf. The act of estate planning can provide some peace of mind that your wishes will be followed even if you do not have children to speak on your behalf.
