24 July 2024

Estate Planning for the Never-Married

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When Adam Cooperman opened a technology consulting firm in New York City eight years ago at age 33, he also prepared a will and other legal and medical documents. “If I have all these professional matters, I should probably have my personal affairs in order, as well,” he explained. With no spouse or children, he divided his assets equally between his parents and his brother. Partly because those relatives were 3,000 miles away in California, he gave powers such as his health care proxy, or the right to make medical decisions if he is incapable, to “people that I valued as mentors, advisers and friends” who lived nearby. Today Mr. Cooperman, still single and childless, has sold his business and is rethinking his estate plan. He might hand the nonfinancial powers, along with his assets, now in the low seven figures, to his relatives.

For married couples and parents, such estate decisions are usually routine: The surviving partner and offspring get the money and the legal and medical authority. However, more and more Americans are in a position similar to that of Mr. Cooperman. According to the Pew Research Center, 20 percent of adults age 25 and older in 2012 had never married, up from 9 percent in 1960. The number of women age 40 to 44 who also have not borne children has seesawed, from 10 percent in 1976 to 20 percent in 2005 to 15 percent in 2014. When people do not specify their intentions, most state laws follow fairly rigid genealogical rules of inheritance and chew up time and money in the process.

Estate-planning experts say the first choices as heirs are usually a longtime companion, nieces and nephews, and siblings, followed by parents, other relatives, then friends. After that list, women and older clients are particularly likely to add charities, planners say. Experts also advise wealthy clients to consider charitable bequests to reduce estate taxes. Most popular are the donor’s alma mater and medical causes that affected the donor’s life, although planners have seen beneficiaries like animal shelters and scholarships for firefighters.

When she wrote her will four years ago, Mary Reilly, now 52 and the owner of the MBA Nanny, a backup babysitting service in New York, divided her approximately $400,000 in assets equally between her two sisters. She omitted her longtime boyfriend, noting that “his net worth was fairly substantial.” That decision became moot when the couple later split up. And as she contemplates updating her documents, Ms. Reilly said she might reduce one sister’s share to around 30 percent, because “she’s married, and her husband has done pretty well.” She might also carve out a combined 5 to 10 percent for her three nephews, now that all are over age 18.

Experts disagree on whether financial beneficiaries should also have legal and medical authority, as Mr. Cooperman is considering doing. Stephanie J. Lee, founder of East Rock Financial Services, a financial advisory firm in San Francisco, warned that heirs might have difficulty coping with estate work “at a time when they’re grieving.”

Lawyers, accountants and bank trust officers can handle legal and financial tasks, but for sensitive medical decisions, experts suggest relatives or close friends who are geographically nearby and have enough time. Ms. Reilly gave her then-boyfriend, rather than her sisters, her health care proxy, because “he understood more clearly that I would not want to stay alive forever.”

In any case, people should review these decisions every five or so years, according to estate-planning experts. For now, Andrea Reichenbach, 39, a New York marketer, named her parents and brother as the beneficiaries of assets she calls “modest by New York standards” and gave her brother her health care proxy.

Click here to access the full article on New York Times.


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