WLG On Our Mind

Tuesday, January 20, 2015

Estate Planning When You Have Assets, but no Children

For some, it’s all about the kids.  A lot of San Diegans only come in to see an estate planning lawyer to figure out how to take care of their kids once they are gone.    For those with minor children, this might revolve around choosing legal guardians, setting up educational trusts, and making sure there is someone to manage any assets left for the kids.  Beyond that, parents never stop being parents.  Parents want to be certain that their deaths don’t disrupt their children’s lives, and most of all, they want to pass on three things to their children:  memories, advantages in life and financial security.  These are good reasons but they skirt around the real reason which is to maintain control over themselves, their children and their assets.

But what about those who don’t have children?  What do those with money and no kids direct their estate planning lawyers to do?

Who Are These People?

According to a recent Gallup Article, 14% of adults over age 45 are without children.  There are quite a lot of adults without children who are doing their estate planning.  As a group, these childfree individuals and couples tend to be more educated and affluent than the general population.  Forty-five and up is a broad group of people – from dual income no kid couples to singles nearing retirement. 

Big Issues

For individuals without children, some estate planning choices can be more difficult.  The vast majority of individuals with children empower their children to act for them in financial and medical decision making if they do not have a spouse to make those decisions for them.  According to a Bloomberg Article by Rich Miller (analyzing Bureau of Labor Statistics data), 50.2% of all Americans over 16 years and older are now single.  If this is true of individuals without children, then that group of over 7% of the populace faces a doubly daunting challenge in choosing who should act for them if they are incapacitated or have died.

Who do you trust?

Younger adults without children may have their parents or siblings available to step in to act, as well as nieces and nephews.  Unfortunately, it is rarely that simple. 

While our national entrepreneurial and tech booms have created a still growing class of younger men and women who have come into money before they’ve had the opportunity to get married and/or start a family, long work hours are leaving them without large circles of close friends outside of work.  This narrows their range of choices.  We are seeing co-workers serve as executors and successor trustees for individual who they barely knew outside of the workplace. This can be an invitation for surviving family members to get bent out of shape.

Older adults without children may find that their best choice of a person or company to act for them may be a professional trustee.  Professional trustees range from Trust Companies with nationwide reach to individuals who are licensed Professional Fiduciaries, Attorneys or CPAs.

Who do you love?

Of course, many of the people described above will want at least a portion of their estate to go to family members.  Aunts and uncles may want to set up college funds for their siblings’ kids or grandkids.  Adult children may want to leave support behind to make sure that Mom and Dad are set for retirement and beyond. 

Young or old, many people seem to be showing an interest in leaving some of their wealth to charitable causes.  Many individuals without children are choosing to leave more than a tithe (10%) of their assets to support their causes or make a difference when they are gone.  San Diego will and trust lawyers sometimes refer to this as “legacy planning.”  Their client identifies a cause that he or she is particularly interested in supporting and then names that cause as a beneficiary in their will, trust or on certain accounts or policies.  A growing approach for public good minded individuals is the use of donor-advised funds.  Funded during lifetime (creating a current charitable deduction), or at death, these alternatives to the foundations created by the very wealthy hold and invest funds to be given to charities selected by the donor immediately or at a later date.  By using a donor advised fund, you can provide for charitable gifts to be made and causes to be supported, long after you are gone.

Planning Early Is Key

The fact that an individual does not have children does not make the need for estate planning any less important.  The California Probate Code has a plan for your assets if you don’t make a plan.  Arguably, men and women without children have more incentive to make their wishes legally binding and known. They cannot just “leave everything to the kids.” 

We all spend a lifetime building our nest eggs.  We don’t want those eggs tossed about without care.  Most individuals want a say in what happens to the money they’ve accumulated over their lifetimes.  Equally importantly, almost everyone wants a say in who can make medical and financial decisions for them in an emergency if they cannot do so for themselves.  There may be charities you want to benefit and there are choices to be made in the best way to support the causes you believe in.  

If you are an adult without children, it is important that you meet with an estate planning attorney.  An estate planning lawyer can create for you the tools and structures needed for you to control your property and insure that your medical treatment wishes are followed. 

When friends ask when they should see an estate planning attorney, I tell them “we all drive on the freeway; we don’t know which day is ours.”  See one before your family needs for you to have seen one.  Attorney Joel Weissler and Attorney Damien Snow can be reached at (619) 281-1888.


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