Most people contemplating their estate plans have specific family members in mind that they seek to provide assets as well as peace of mind. Not everyone has a spouse, children or even close relatives. Do they still need an estate plan? Absolutely and here are two main reasons why.
Avoid Intestate Succession
Passing away without a will, referred to as dying intestate, means that the Maryland laws of intestate succession dictate how all of your hard-earned assets will be distributed. The inheritance hierarchy goes to a spouse, followed by children, then grandchildren. If none of these relatives exist for a decedent, then assets may go to parents, grandparents, siblings, nephews, nieces or even escheat to the state.
Rather than let this result, it is often better to execute a will that names specific people – friends, business partners, distance relatives, neighbors – as your beneficiaries. If you would rather leave your legacy philanthropically, you also have many options. You can make a charitable organization the beneficiary of your estate in your will or you can use one of the following charitable gifting strategies:
- Charitable Remainder Trusts: This type of trust is structured so that you continue to receive an income stream from the assets funding the trust for either a designated time period or for the rest of your life. You also receive an immediate charitable deduction based on the present value of the assets transferred into the irrevocable trust. Upon your death, or another specified time, the remaining assets will be distributed to the charity you select.
- Donor-Advised Funds: You make an irrevocable, tax-deductible contribution of assets which are invested for future growth and may be given to qualified 501(c)(3) charities at any time.
- Private Foundation: You make an initial tax-deductible gift into the foundation which is run by a board of directors. All assets will be managed by the board. Grants may be given to charities and are not limited to 501(c)(3) charities.
Incapacity Planning
Beyond distribution of assets upon your death, comprehensive estate planning also covers how your legal, financial and medical affairs will be handled upon your incapacity. You also need to execute the following legal documents:
- Durable Power of Attorney: This allows you to authorize an agent to act on your behalf. It bestows certain powers that you choose on that person should you be incapable of acting on your own behalf. These powers often include access to bank accounts to pay bills, the right to buy or sell property, manage investments, give gifts and take certain legal actions as needed.
- Healthcare Power of Attorney: This document allows you to designate a healthcare agent to make medical decisions for you when you are not capable of making your own decisions. The powers bestowed on your healthcare agent may include access to medical records, choosing medications, choosing assisted living facilities, electing to have or not have a type of surgery or medical procedure.
- Living Will: This document provides details to assist your healthcare agent in making decision that are in line with your wishes.
While not having a spouse or children may seem like a reason to forego estate planning, as we have discussed there are still reasons to properly plan. To discuss your situation with experienced estate planning attorneys and learn all of your options, contact the attorneys at Stouffer Legal in the Greater Baltimore area. You can schedule an appointment by calling us at (443) 470-3599 or emailing us at office@stoufferlegal.com.
