by Brandon Culter
Many people mistakenly think if they are single they do not need to worry about preparing an estate plan. But think about this - who has the legal right to make decisions about your finances and your health if you experience a catastrophic event leaving you unable to make decisions for yourself? If you are over 18 years of age, it won't be your parents.
If a single person becomes incapacitated someone should be named as their agent to make financial and medical decisions for them.
A Durable General Power of Attorney is a document by which you as the “principal” appoint a person to act as your “agent” to make financial decisions on your behalf should you become disabled. A “durable” power of attorney means that the power of the agent to act on the principal's behalf continues despite the incapacity of the principal. If you become incapacitated and do not have a durable power of attorney for finances, your family must ask a court to appoint a conservator. This can be time consuming and awkward if family members must prove you are incompetent to handle your affairs.
A Durable Health Care Power of Attorney allows you to appoint someone as your agent to make medical decisions for you if you are incapacitated. A Durable Health Care Power of Attorney can cover more health care decisions than a Living Will does and is not limited to terminal illness. Without an agent to carry out your medical instructions, a guardian may also need to be appointed to make medical decisions on your behalf. Your court appointed guardian may have different ideas about your medical treatment than you would have. Communicating your wishes in advance will help avoid potential confusion and ensure your wishes are carried out.
Colorado statutes give a person the right to make their own legally-binding decisions regarding the disposition of their body after they die in a written document. The suggested statutory form contains instructions indicating whether you want to be buried, cremated, entombed or whether you would prefer to appoint a designee to make the decision for you. You can also include instructions about the type of funeral or memorial service you prefer. If you do not leave written instructions the statutes dictate which persons have priority to make these decisions for you. If a single person dies and no children, parents or siblings are willing or able to make the decision, the State of Colorado controls the disposition of your last remains.
Single people need an estate plan to ensure that relatives, friends, or their favorite charities receive specific possessions and assets after their death. If there is no will or other estate plan in place, assets will be distributed according to a pre-set formula devised by the State of Colorado. Single people also should plan in the event of their incapacity. Without a valid durable power of attorney in place, a single person’s family and loved ones must rely on court-appointed processes for the appointment of individuals to make financial and medical decisions on their behalf. Below are some estate planning devices a single person should consider:
A Will directs how and to whom your property shall be distributed after your death. A valid and effective Will distributes what you own as you see fit through a person you choose to administer your Will. This person is called a "personal representative" in Colorado. Anyone who is of sound mind and at least eighteen (18) years old can make a Will. Under Colorado law, the Will should be acknowledged before two witnesses and signed by the maker and the witnesses.
If a single person dies without a Will his or her estate will pass to such persons “heirs” as defined by the Colorado statutes. When a single person with children dies without a Will, Colorado laws provides that the entire estate goes to the children. If a single person has no children or other descendants, his or her estate will pass to such person’s surviving parents. If both parents are deceased, the single person’s brothers and sisters receive the estate. If no brothers or sisters exist, Colorado then looks to the next closest living relatives beginning with nieces and nephews, and later grandparents, aunts and uncles and so on. If no family can be found, the estate could ultimately end up being disposed of according to Colorado's unclaimed property laws.
The Colorado statute broadly defines a person’s relatives to include relatives of half blood. If a single person dies and his or her parents are deceased, and such person has, for example, two whole blood siblings and two half blood siblings, all the siblings would inherit equally. Such results may or may not be desirable. The point to remember is that you don’t decide who receives your estate, the State of Colorado does.
A single person with minor children has special estate planning needs. If your ex-spouse predeceases you and no one has been named as guardian of your children the court has the right to make this appointment. The single parent also needs to appoint someone to manage the funds that are left for the minor children’s benefit. This selection should be someone who can be trusted, who is money wise, and can manage the funds that will take care of the health and well-being of the children. These concerns can be addressed in a valid Will which names a Guardian to care of the minor children and a Trustee to manage the children’s estates.
A Living Will, known as a Declaration as to Medical or Surgical Treatment in Colorado, is not really a Will at all, but is a document which allows you to specify whether you want life-prolonging measures administered in the event you have been diagnosed with a terminal condition. In Colorado, your Living Will does not go into effect until two doctors both agree that you have an injury, disease or illness which is not curable or reversible. In addition, Living Wills may also be used to stop tube feeding and other forms of artificial nourishment, but only if you clearly state this in the Living Will. Without a Living Will, you could lie in a vegetative state for months, even years, and the burden could fall to your loved ones to petition the court to have the life-prolonging medical care withdrawn.
If the avoidance of probate or privacy are a concern, a single person should also consider the use of a revocable living trust. Assets owned by a trust pass outside the probate estate and can be distributed by the Trustee to the beneficiaries without the delays commonly associated with probate.
A single person who is charitably inclined needs to have an estate plan in place to ensure that all or a portion of their estate be distributed to the charity or charities of their choice. A Will or trust can be an effective vehicle to satisfy your charitable desires.
If a single person has an estate large enough to be subject to the federal estate tax, there are many estate planning options at their disposal to eliminate or reduce federal estate taxes, including the utilization of a disciplined gifting program or the use of irrevocable trusts to remove assets, such as life insurance, from their taxed estate.
Certain assets, such as retirement plans and life insurance pass by contract. That is, they pass to the persons or entities you designate as the beneficiary, after you die. Proper designation of beneficiaries on retirement plans and life insurance is an often over-looked aspect of estate planning. Failure to account for a divorce, or the birth or death of a current or potential beneficiary on an existing beneficiary designation, can lead to unwanted results.
Estate planning is not just for married individuals. Whether you’re a single parent or a single adult, making your estate plan is an important part of your future.
Contact us for a Free 45 minute consultation to discuss your desires and needs. Reach out to us at info@culterlaw.com.