Estate planning for singles is equally as important as for married couples. It may sound absurd but it’s the truth, you are not thinking about death and incapacity in your 30’s. You are probably thinking there is plenty of time in the future to worry about that kind of stuff. Maybe there is, and maybe there isn’t. I hate to break it to you, but since none of us have a crystal ball, we really don’t know how much time there is. Let’s look at what can happen to a 30 something who did not do any estate planning.
Let’s take Jaden for example. He is 32 years old with a great job. He lives in a 2 bedroom apartment in Phoenix, with his serious girlfriend of 5 years, Jennifer. Jaden pays for the rent and household expenses because he earns more than Jennifer. Jennifer, alone, would not be able to afford to live in the apartment. Jaden is also helping Jennifer make her car payments. There has always been some friction between Jaden’s parents and Jennifer since his parents do not understand why Jaden has to shoulder most of the financial responsibilities.
Jaden is coming home from a night out with some of his work buddies when a drunk driver, driving down the wrong side of the road, hits Jaden, and kills him instantly. Jaden does not have a Will. In fact, he hasn’t even filled out the beneficiary forms yet on the 401K and life insurance he has at work.
What is going to happen now?
1st, the Arizona intestacy laws will come into play since Jaden does not have a Will. If someone dies without a Will, it is called “dying intestate”. This means that the law will say who gets all of Jaden’s assets.
The Law: If someone dies “intestate”, that person’s spouse gets everything. If there is not a living spouse, then that person’s kids get everything. If there are not any living children, then that person’s parents get everything. If there are not living parents, then that person’s siblings get everything. The list continues from there.
Because of the intestacy laws, it is very, very difficult for the State to get all of someone’s assets. There really has to be no family at all before the State takes everything.
In Jaden’s situation, his parents will get all of his assets. You might be thinking, what about Jennifer? Good question, what about Jennifer? Jennifer is entitled to absolutely nothing. Jennifer’s entire life is now disrupted. She must move, pay for the car herself and otherwise try to overcome the emotional and financial catastrophe of Jaden’s death.
What could Jaden have done differently?
- He could have put a Will together saying that some or all of his assets would go to Jennifer.
- He could have put together a Revocable Living Trust saying that some or all of his assets would go to Jennifer.
- He could have named Jennifer as the beneficiary of his 401K. Even though Jaden’s parents are entitled to everything, this DOES NOT include any beneficiary designated assets. A beneficiary designation trumps all other documents. So, had Jaden put Jennifer as the primary beneficiary of his 401K and life insurance, Jaden’s parents would have no say in the matter.
Jaden could also have named Jennifer as the beneficiary of all of his bank accounts and investment accounts.
Another benefit to naming beneficiaries on assets is that those assets then avoid probate.
Get in contact with me today to make sure your estate planning affairs are in order.
Where There’s A Will, There’s A Way