14 January Estate Planning for Solos
By Mary B. Young, D.B.A.
Most of us drag our heels when it comes to estate-planning. It simmers quietly on the back burner, muffled by more immediate issues. Whether we’re Solos, married, and/or have children, we’re seldom eager to contemplate our own mortality.
After age 60, people are more likely to seek out an estate planner. Often, it’s triggered by some personal milestone like retirement or moving closer to a family member, says Seunghee Cha, who specializes in trusts and estates and special needs planning at Bulkley Richardson’s Hadley office. Sometimes, it’s a loved one’s health scare or incapacitation that gives us the not-so-gentle nudge.
Naming Names Is a Challenge for Solos
But there’s an additional hurdle that most Solos need to overcome, even as they grow older. Who can they ask to serve in any of the roles named in an estate plan? If they ever became incapacitated, who would act as their healthcare agent or attorney-in-fact under a power of attorney? After they die, who could serve as their personal representative (formerly known as an executor) or trustee or become their beneficiary? It’s easier to answer these questions if you’re not Solo and automatically assume that your spouse or children will step up. For Solos, it’s less obvious.
Unfortunately, many Solos think they have to have identified the “people” before reaching out to an attorney. That’s not so, says Cha. An estate planner’s job is to help the client figure this out. “It should be an educational process to help the client understand all the different roles and choose the right person suited to each role,” she says.
A Careful, Thoughtful Process
“Naming names” is a key part of estate-planning. It often takes Solos longer to come up with possibilities. They also need to assess each person’s suitability for a specific role, based on their character, skills, experience and personal circumstances.
Another, equally important consideration, says Cha, is to look at the slate of prospects as a team, which could include friends, family, and professionals such as a financial planner, elder-care advisor, or financial institution. How well would they work together? The fiduciary who manages your assets and the healthcare agent who might prefer to see you in a more expensive long-term care facility, for example, have overlapping roles. They could disagree about your wishes and what would be in your best interests. If they don’t trust each other or don’t cooperate, a Solo’s wellbeing could ultimately be at risk.
Pressure-testing your prospect list is a thoughtful―and often time-consuming― process. While it’s tempting to skip this step, it’s important to weigh your options thoroughly before approaching candidates. Once you’re ready to do so, it may take multiple conversations―in some cases, difficult ones. Candidates need to understand what they’re signing up for as a member of your estate-plan team. You need to talk about your wishes and personal values―and theirs.
Be prepared for the possibility you’ll be turned down. If that happens, it’s important to move on, says Cha. “You can’t afford to waste names on people who won’t show up.” Frank conversations will help you make better decisions and deepen your relationship with your selected agents.
Once Is Not Enough
Given the need to weigh so many considerations―and with so much at stake should you get it wrong― Solos need an estate plan at least as much as non-Solos do. Procrastinating could be a costly mistake. “Plan while you’re not in a crisis and capable of being fully engaged in your own decision-making,” she advises.
That means years might go by before your estate plan is put into action. In the interim, things often change. Someone you previously named moves abroad, takes on other responsibilities, or demonstrates poor judgment. Your own health or financial situation might also change. Because life is unpredictable, says Cha, Solos should review their estate plan with their attorney at least every few years.
Evolving circumstances may warrant naming different people, and these changes may require informing you previously named fiduciaries that they have been replaced. Be prepared for awkwardness and hurt feelings, says Cha, but by clearly communicating your decisions you can avoid unpleasant surprises and misunderstandings.
The good news is that estate-planning may actually have a silver lining for Solos. Non-Solos may experience less angst if they automatically assume that their spouse or children will step up, when needed. But in actual experience, that’s not always how things play out. But because Solos can take less for granted, those who do engage in estate planning can come away feeling confident that they now have a robust plan
Future articles in this series will dig deeper into the topic of estate planning for Solos. The next explores a range of possible options for filling the roles in your estate plan, using a creative mix of personal relationships, professionals, and financial institutions. The third article explains dangerous pitfalls Solos should avoid when planning for their future well-being.