Why Start Estate Planning if I Have No Heirs?
An existing misconception in the field of estate planning is that it is only valuable for those with a spouse, children, or other types of typical heirs. However, this could not be further from the truth.
What is Estate Planning?
Estate planning is the legal process of managing your assets. It is created during your life to minimize taxes, avoid lawsuits, and properly distribute your assets after your death. This process is already difficult and time-consuming and may be even more challenging to begin on one’s own for those without any children or other heirs to leave their assets to. This often results in individuals not planning their estates altogether. What they don’t realize is that there are many options out there for those without beneficiaries.
What Will Happen to Your Assets if You Don’t Have Heirs?
Estate planning is highly important even if you do not have any children or heirs to leave your assets to when you pass. It is still recommended to have a will because dying without one in place makes you intestate, meaning the court has the power to decide how and to whom your assets are distributed.
In 2013, a man named Roman Blum died without a will in New York. He had over $40 million in assets at the time of his death and did not have a will in place because he had no living heirs to claim an inheritance. Unfortunately, with no legal document allocating his assets and no family members, the power was in the hands of the court. Typically when one dies intestate, the Table of Consanguinity is used to find the closest living relative and this lucky person gets the assets. However, in Mr. Blum’s case, no relatives could be found so his assets went directly into the state’s general coffers. This can easily be avoided through proper estate planning.
If you do not have family members, one option that financial advisors encourage is to leave your assets to charity, which is not only generous but tax-free as well. Additionally, besides organizations, another way to ensure that your assets do not go to waste is to leave them to a friend. You might wish to leave your estate to your friend rather than have the government take your assets. Furthermore, it is also highly advisable to set up a living will if you do not have family members to care for you in medical emergencies. This legal document will allow you to state your medical wishes in the event that you become incapacitated and provides physicians with directions to follow regarding issues such as life support and organ donation. Furthermore, even if you do not have family members, part of your estate planning process should include looking for someone that can make health-care decisions for you. Additionally, if you have a pet that you consider family and would like to make sure they are taken care of when you’re gone, you can actually leave your estate to them. In your will, you can leave your pet to a trusted friend or a charity and allocate an estimated amount that will be needed for the cost of caring for your pet.
Who Will be the Executor of my Estate?
Part of the estate planning process is naming an executor. If you do not have a spouse or other family member that can be your personal representative to be responsible for handling your estate, you can designate anybody else that you trust. Another possible option would be to set up a trust or to name your bank as your executor, however, this route will require a fee.
The Estate Planning Process
One of the most basic documents in anyone’s estate plan is the Last Will and Testament. Without a Will, your assets will be distributed in accordance with the intestate laws of your domicile state. Your Last Will should very explicitly describe how you want your estate to be handled and distributed after your death. If you do not have any children or any other relative or friend who you would like to leave your estate, you can pick a charity and leave your estate to one or more non-profit organizations.
Another important and essential step in estate planning is to prepare a living will or Health Care Proxy. Many people are concerned with appointing someone who is not their family member. It is perfectly fine to pick a person who is not your family, but you can trust him or her to make informed decisions about your health decisions.
The next step is to establish a financial power of attorney, especially if you do not have any heirs. If you simply cannot find anyone to fulfill this responsibility, you can talk to your bank about naming them as your power of attorney. Though having a friend act as your agent through the power of attorney is free, banks will often charge a fee.
Once you have completed your initial estate planning, it is very important to keep it up to date. It is best to review your estate plan every five years. Many things can change over the years, including your marital and parental status. Many of my clients’ feelings have changed over the years towards potential beneficiaries and charities. Similarly, it is important to note that any life insurance policies and 401(k) plans that you have must be up to date with the information stated in your will.
Estate planning is there for your convenience and to make life easier for you and the people around you. Though it can be challenging, especially for those individuals without heirs, having a professional estate planning attorney to assist you will ease the process.
When considering the estate planning process, whether you have heirs or not, please call the Law Office of Inna Fershteyn at 718-333-2394 for professional assistance.