When people think of estate planning, they often think about providing for children and grandchildren. Does that mean that childless Colorado individuals and couples don’t need an estate plan? Hardly. People without children need an estate plan as much as anyone else, but their needs are different in nature.
For people without children, there are two main areas of concern in estate planning. The first is arranging for the handling of medical and financial decisions in the event they become incapacitated and the second is disposing of their wealth and assets.
Planning for Incapacity
No one likes to imagine a time when they won’t be able to make their own decisions or handle their own affairs, but failing to plan for incapacity doesn’t prevent it. It’s important to sign general powers-of-attorney and health care documents that give someone you trust the power to make important medical and financial decisions for you if you become incapacitated. These include advance health care directives, and HIPAA authorizations so that your medical care providers can communicate with the people you choose.
If you’re married, you can appoint your spouse, but it’s important to have a backup person to serve either with your spouse, or as a successor. Ideally this person would be young enough that he or she would be unlikely to become incapacitated soon after you or your spouse.
If you’re unmarried and childless, you may grant power of attorney to siblings, nieces or nephews, cousins, neighbors, or perhaps even clergy. This isn’t a decision to be made lightly; the person to whom you grant authority may be making end-of-life decisions for you and managing all your assets, so it should be someone you trust implicitly. You should also make sure they’re willing to take on this responsibility, and should help them understand your wishes so they are confident making decisions on your behalf.
Where Will the Assets Go?
Managing the disposition of wealth is somewhat different for childless individuals and for couples. In either case, if there is no valid will or trust in place, Colorado law will determine how assets are disposed of, typically to nearest relatives first. As with any estate without an estate plan, Colorado law may cause assets to be distributed in a way that doesn’t jibe with the preferences the deceased may have had.
For unmarried individuals in particular, this can result in so-called “laughing heirs,” family members who are close enough under the law to inherit, but not close enough to the deceased to mourn him or her. Instead of letting the law decide, a better option is to use a will and/or trust to direct assets to people or charities that you care about.
Childless married couples have a different dilemma. When one dies, the other spouse typically inherits all of the property. When the second spouse dies, all of the couple’s assets go to his or her heirs, unless the couple has made other plans. A simple way to do so is with wills that leave everything to each other, but specify who inherits what when the second spouse dies. Such wills are often referred to as “sweetheart wills.”
Another option is transferring assets, either during life or at death, to a joint revocable living trust, which would specify how the assets should be distributed. An irrevocable trust locks in even more control over the ultimate disposition of assets. A trust has the added advantage of bypassing probate.
If you have no children and need to make or update an estate plan, contact the experienced estate planning and probate attorneys at Davis Schilken. Call us at 303-670-9855 to arrange a consultation at one of our two locations in The Denver Tech Center and Golden, Colorado. We look forward to working with you.