Many people believe that if they are single, they don't need a will or other estate planning documents. But estate planning is just as important for single people as it is for couples and families.

Estate planning allows you to ensure that your property will go to the people you want, in the way you want, and when you want. If you do not have an estate plan, the state will decide who gets your property and who will make decisions for you should you become incapacitated, and these aren't necessarily the choices you would have wanted. An estate plan can also help you save on estate taxes and on court costs for your loved ones.

The most basic estate planning document is a will. If you do not have a will directing who will inherit your assets, your estate will be distributed according to state law. If you are single, most states provide that your estate will go to your children or to other living relatives if you don't have children. If you have absolutely no living relatives, then your estate will go to the state. You may not want to leave your entire estate to relatives — you may have close friends or charities that you feel should get something. Without a will, you have no way of directing where your property goes.

The next most important document is a durable power of attorney. A power of attorney allows a person you appoint — your “attorney-in-fact” or “agent” — to act in your place for financial purposes if and when you ever become incapacitated. In that case, the person you choose will be able to step in and take care of your financial affairs. Without a durable power of attorney, no one can represent you unless a court appoints a conservator or guardian. That court process takes time, costs money, and the judge may not choose the person you would prefer.

In addition, you should have a health care proxy. Similar to a power of attorney, a health care proxy allows an individual to appoint someone else to act as their agent, but for medical, as opposed to financial, decisions. Unlike married individuals, unmarried partners or friends usually can't make decisions for each other without signed authorization.

If you are planning to give away a lot of your money, there are ways to do that efficiently through the annual gift tax exclusion and charitable remainder trusts. Other estate planning documents to consider are a revocable living trust and a living will.

Finally, for singles who are unmarried but have a partner, an estate plan is arguably even more important than for married couples because without one, unmarried couples won’t be able to make end-of-life decisions or inherit from each other. 

Don't think that because you are single, you don't need an estate plan. Contact your attorney to find out what estate planning documents you need to assure your wishes will be carried out and those you care about will be protected.

 

Allocating your personal possessions can be one of the most difficult tasks when creating an estate plan. To avoid family feuds after you are gone, it is important to have a plan and make your wishes clear.  

When passing on possessions to your heirs, savings and investments are easy to divide up, since they can be turned into cash. Real estate can also be turned into cash or co-owners can share it. The most difficult items to divvy up are personal possessions—silverware, dishes, artwork, furniture, tools, jewelry — items that are unique and don’t have a set resale value. In legal speak, these are known as “tangible personal property” and can become the focus of family fights. Often one or more children claim that a parent had promised them a particular item. Things may disappear from a house or an apartment shortly before or after a parent's death, or a child may claim that her 90-year-old somewhat-demented mother “gave” her a cherished diamond ring during life. These types of situations can create great suspicion and irrevocably split families. Siblings may stop communicating due to their anger and distrust. 

Clarity about one's wishes can go a long way toward avoiding these difficulties. Also, it's important that the personal representative of an estate (also called an executor) secure the deceased person's residence as soon as possible after death to make sure items don't disappear. Here are a few steps you or the personal representative of your estate can take to make sure splitting up your stuff doesn't split up your family:

• List the most important or valuable items in your will. While your will could get very long if you tried to list all of your possessions, you may have a few family heirlooms or valuable artworks that you want to stay in the family. It may be easier for all concerned if you say who should get what. But talk with your children or other family members first to determine who values which items most.
• Direct that certain items be sold. If you have one or more possessions that have much greater value than others, it can be difficult to make your distributions equal. It may make more sense to sell the items of greatest value and distribute the proceeds. For example, in a family whose parents were able to save one painting by a famous artist when they fled Europe during the Holocaust, the children sold the painting and split the proceeds equally, since it would not have been fair for any one of them to have received the painting and none had the resources to buy out the other two. The painting was auctioned at Christie's and they were all quite happy with the results.
• Write a memorandum. You can write a list of who should receive what item. If your will references the list, it will be enforceable. Be careful about how you describe each item so that there is no confusion. Unlike your will, this list can be as long as you like, and you can change it without having to go back and redo your will. Send a copy to your lawyer as well as any updates as they occur to ensure the list doesn't get lost or ignored when the time comes.
• Give everything away now. Well, perhaps not everything, but the more you disburse during life, the less that will have to be dealt with at death. When you make gifts, make sure that everyone knows about it so that the person receiving the gift is not suspected of having pilfered your jewelry box, for instance. There may be items that you would like to give away, but still want in your house. This is especially true of artwork and furniture. As long as the new owner is agreeable, you can keep these items around. You might want to tape a note to the back or underside explaining that the Rembrandt, for instance, belongs to your daughter, Jane. (Of course, if it is a Rembrandt, you will need to file a gift tax return and a transfer document.) Be aware that for highly-appreciated property, for tax reasons, it may be better not to make gifts during life because they'll lose the step-up in basis. So check with your estate planning attorney or tax accountant first.
• Get an appraisal. For the tax reasons referenced above and to guide you in deciding who should get what, it can be useful to know the monetary value of the items you're giving away, whether during life or at death. This can also be very important for your personal representative and for your heirs in making their decisions.
• Use a lottery. If you do not made choices regarding your estate plan, your personal representative may want to set up a lottery system for distributing the tangible assets. The representative can put names or numbers into a hat and someone can draw them out to determine the order in which the family members or other heirs will choose items. In order to inform the process, the personal representative should create a list of the most valuable items, including their appraisal value if one has been obtained. If everyone is in the same location at the same time, they can simply take turns. If that's not possible, the personal representative can add pictures to the list to help identify the items and the beneficiaries can choose online, informing the personal representative of their choices as their turns come up. The order of who chooses can change each round, whether reversing or moving along progressively. Here's the distinction between these two alternatives:

Reversing: 1,2,3,4,5; 5,4,3,2,1; 1,2,3,4,5
Progressive: 1,2,3,4,5; 2,3,4,5,1; 3,4,5,1,2

• Bidding. A more complicated structure would be to provide all of the heirs the same number of tokens or points that they can use to bid on the various items. For instance, someone who really wants one painting or photo album more than anything else could put all the tokens on that. Someone who doesn't care as much would bid fewer tokens. The complication in this approach is what happens after an item is gone. Certainly, anyone who used up his or her tokens “winning” an item in the first round is out, but can those who lost reallocate their tokens to other items? A variation on this theme would be for everyone to rank the items by preference. When there's no competition, everyone who chose an item first would get that one. When more than one person chose an item as their first choice, they might draw straws, with those losing getting to choose again.

The more you decide who gets what rather than leaving the decisions to your family, the less likely the distribution process will create family strife.

Estate administration is the process of managing and distributing a person’s property (the “estate”) after death.  If the person had a will, the will goes through probate, which is the process by which the deceased person's property is passed to his or her heirs and legatees (people named in the will). The entire process, supervised by the probate court, usually takes about a year. However, substantial distributions from the estate can be made in the interim.

The emotional trauma brought on by the death of a close family member often is accompanied by bewilderment about the financial and legal steps the survivors must take. The spouse who passed away may have handled all of the couple's finances. Or perhaps a child must begin taking care of probating an estate about which he or she knows little. And this task may come on top of commitments to family and work that can't be set aside. Finally, the estate itself may be in disarray or scattered among many accounts, which is not unusual with a generation that saw banks collapse during the Depression.

Here we set out the steps the surviving family members should take. These responsibilities ultimately fall on whoever was appointed executor or personal representative in the deceased family member's will. Matters can be a bit more complicated in the absence of a will, because it may not be clear who has the responsibility of carrying out these steps.

First, secure the tangible property. This means anything you can touch, such as silverware, dishes, furniture, or artwork. You will need to determine accurate values of each piece of property, which may require appraisals, and then distribute the property as the deceased directed. If property is passed around to family members before you have the opportunity to take an inventory, this will become a difficult, if not impossible, task. Of course, this does not apply to gifts the deceased may have made during life, which will not be part of his or her estate.

Second, take your time. You do not need to take any other steps immediately. While bills do need to be paid, they can wait a month or two without adverse repercussions. It's more important that you and your family have time to grieve. Financial matters can wait. (One exception: Social Security should be notified within a month of death. If checks are issued following death, you could be in for a battle. For more on Social Security's death procedures, click here.) 

When you're ready, but not a day sooner, meet with an attorney to review the steps necessary to administer the deceased's estate. Bring as much information as possible about finances, taxes and debts. Don't worry about putting the papers in order first; the lawyer will have experience in organizing and understanding confusing financial statements.

The exact rules of estate administration differ from state to state. In general, they include the following steps:

1. Filing the will. You must file the will and petition at the probate court in order to be appointed executor or personal representative. In the absence of a will, heirs must petition the court to be appointed “administrator” of the estate.
2. Marshaling, or collecting, the assets. This means that you have to find out everything the deceased owned. You need to file a list, known as an “inventory,” with the probate court. It's generally best to consolidate all the estate funds to the extent possible. Bills and bequests should be paid from a single checking account, either one you establish or one set up by your attorney, so that you can keep track of all expenditures.
3. Paying bills and taxes. If an state or federal estate tax return is needed—generally if the estate exceeds $1 million in value—it must be filed within nine months of the date of death. If you miss this deadline and the estate is taxable, severe penalties and interest may apply. If you do not have all the information available in time, you can file for an extension and pay your best estimate of the tax due.
4. Filing tax returns. You must also file a final income tax return for the decedent and, if the estate holds any assets and earns interest or dividends, an income tax return for the estate. If the estate does earn income during the administration process, it will have to obtain its own tax identification number in order to keep track of such earnings.
5. Distributing property to the heirs and legatees. Generally, executors do not pay out all of the estate assets until the period runs out for creditors to make claims, which can be as long as a year after the date of death. But once the executor understands the estate and the likely claims, he or she can distribute most of the assets, retaining a reserve for unanticipated claims and the costs of closing out the estate.
6. Filing a final account. The executor must file an account with the probate court listing any income to the estate since the date of death and all expenses and estate distributions. Once the court approves this final account, the executor can distribute whatever is left in the closing reserve, and finish his or her work.

Some of these steps can be eliminated by avoiding probate through joint ownership or trusts. But whoever is left in charge still has to pay all debts, file tax returns, and distribute the property to the rightful heirs. You can make it easier for your heirs by keeping good records of your assets and liabilities. This will shorten the process and reduce the legal bill.

Health and Elder Law Programs (H.E.L.P.), a non-profit organization started by a California elder law attorney, offers a checklist to help survivors sort out and keep track of the things that need to be handled after a person has died. 

A fiduciary is a fancy legal term for the person who will take care of your property for you if you are unable to do it yourself, such as the executor of an estate, the trustee of a trust, or an attorney-in-fact under a power of attorney. Your first instinct might be to name one of your children as a fiduciary, but if you want to avoid conflict among your children, this might not be the best option.

When naming a fiduciary, it is important to be able to trust the individual, which is why people often name family members as fiduciaries. However problems can arise when a parent with two or more children names one child as a fiduciary. A child is often not the best fiduciary for several reasons:

It is hard for a child to be completely objective.
Children often disagree over many things, including how long the estate should take to complete, the selling of assets, and the division of personal property.
Children often don't communicate with each other well.
When one child is named as fiduciary problems between family members can arise surprisingly frequently.

An alternative is to hire a professional fiduciary. A professional fiduciary can be a bank with trust powers, a certified public accountant, or a trust company. The attorney who is drafting your estate planning documents can recommend a good one in your area. A professional fiduciary will charge a fee, but the fee should be explained ahead of time. In addition, because a professional is experienced in managing money and property, your assets are more likely to increase under this person's or institution's guidance.

To ensure that your family has some input, you can include a provision that allows one or more family members to discharge the fiduciary if they feel the professional is not doing a good job. This will allow your family to make sure the fiduciary is performing properly without having the burden of acting as fiduciary.

An attorney can help you make sure you have the right fiduciary for your family. 

Imagine you bought a house and, a year and a half later, you discovered bundles of cash totaling more than $100,000 that had been hidden away by the deceased former owner. Who would be entitled to the money — you or the former owner's estate? Confronted with just such an unusual case, a court determined that the new owner should keep the windfall.

William and Helene Valoff owned a house in Milwaukie, Oregon. After Mr. Valoff's unexpected death, all assets of his estate were transferred to Mrs. Valoff. Following Mrs. Valoff's death, her estate sold the house to Helen Sollars. The sale agreement required the estate to leave certain specific personal property (such as a stove and a refrigerator) but to otherwise “remove all personal property (including trash and debris)” before the closing of the sale.

About a year and a half after the closing, an electrician working on the house found bundles of money hidden above the ceiling of the basement. The bundles were bound with rubber bands and adding-machine tapes bearing Mr. Valoff's handwriting. Because of uncertainty about who owned the money, the police seized and counted it and found that it totaled about $122,000.

Ms. Sollars argued that she should receive the money because she was the rightful owner of anything left in the house after the closing. The Valoff estate countered that it remained the owner because it did not intend to transfer any right to the money when it sold the house to Ms. Sollars. A trial court agreed with the estate, reasoning that the sale agreement was for the transfer of a house, not of money that neither party had known about. Ms. Sollars appealed.

The Oregon Court of Appeals reversed the trial court and ruled that Ms. Sollars is the owner of the money. The court concluded that the sales agreement's reference to “all personal property” unambiguously included the money found in the house. The fact that the money's existence was not known at the time of the sale makes no difference, the court held.

To read the court's opinion in the case, Sollars v. City of Milwaukie, click here.