Estate planning can be complicated, whether you are planning it alone or with a spouse. Many choices must be weighed, and it’s an important task that you cannot ignore. If you have a solid estate plan in place, you can ensure your survivors are met with reduced anxiety and stress. Without an estate plan, they would face the burden of making major decisions on your behalf.

What Does It Mean to Plan an Estate as a Single Person?

Single people must ensure that they include detailed instructions as to how their affairs should be managed. The main distinctions for estate planning for single people are listed below.

Difference #1: Estate Taxes

Estate taxes aren’t imposed when a married person leaves property to the surviving spouse since there is an unlimited marital deduction. An estate that belongs to a single individual can be subjected to higher estate taxes. A single person might have to pay more only if the estate’s total value is more than the exclusion for federal estate tax. Since this cost is rising, many states have imposed an estate tax that occurs at the state level. It might be a good idea for single people to think about initiating a trust that can lower or postpone their estate tax or inheritance tax.

Difference #2: Health Care Power of Attorney

A single individual will need to choose a family member or friend that they trust for their healthcare power of attorney. A married couple typically will designate their spouse. Someone with power of attorney acts as your medical proxy, making healthcare-related decisions if you were not able. However, state law mandates that your medical provider must declare that you are unfit to make your own medical choices before your designated proxy can do so on your behalf.

Difference #3: Beneficiaries

A single person will need to designate beneficiaries for their trust or will and need to keep these names updated if they ever change. The people on this legal financial documentation can receive assets even if the relationship has changed.

What Does It Mean to Plan an Estate Together as a Married Couple?

It’s essential to be aware of the potential issues that may arise. Planning an estate together can seem like the best option in a partnership because it ensures all wishes are addressed. It appears to be a good choice because the surviving spouse will be the one to inherit the property and assets from the marriage and that the children will fall next in line. However, if there are children from a prior relationship, this may complicate matters.

Possible Issues with Estate Planning as a Married Couple

These days, estate planning attorneys typically don’t recommend using a joint will.

“If the surviving spouse can’t modify the terms of the will, they can run into a lot of difficulties. If there are new life circumstances, the family might not benefit as they could have if they had the option to make amendments,” explained Charles C. Bratton, an estate planning attorney.

For example, a surviving spouse may not be able to sell the house for a smaller one, offer an adult child a portion of his or her inheritance early, or donate or sell other assets included in the will. They also may not be able to aid grandchildren with college tuition or restrict the uses of inheritance for a child who might not yet be financially responsible.

Additionally, estate tax problems can occur if there is a sizeable estate among the assets. In certain states like Wisconsin, joint wills are not permitted. Probate courts would prefer to separate the wills into two.

A Living Trust Can Help Achieve the Benefits of a Joint Will

The good news is that a strict joint will is not the only option. When a couple wants to guarantee that their assets will go to their children, they can still accomplish this in other ways.

It’s usually crucial that children are taken care of first, rather than a potential future spouse. A couple can begin a trust fund and designate restrictions on it. These restrictions can include how it may be used, who is in charge of it, and when the minor children are permitted to gain access.

People can choose to set these up while they are living, and can remove the requirement of probate. Probate is the process of estate administration and transfer by the court after a person’s death according to their will. Probate can be lengthy, costly, and complicated depending on the state.

Living trusts ensure that after your death, your successor trustee (or a representative) can transfer your assets to the beneficiaries that you choose. Since the trust holds the assets and they didn’t have to change hands, probate might not even be required. Living trusts can also protect assets outside of the trust with a will.

Estate Planning: The Sooner the Better

In short, estate planning as a single person can be more complicated because every decision in regards to estate taxes, beneficiaries, and medical power of attorney must be considered by the individual alone. Consulting with a trusted estate planning attorney is always highly recommended.

When a married couple is planning their estate, they often already know who to name for everything since they have a spouse and possibly children. However, the assumption that a joint will is better than individual wills is a flawed one. No matter how complex, estate planning is one of those tasks that is better to do sooner rather than later.