Why do single people need estate planning?

If you are single, with no kids, and very little assets, you should still have some basic estate planning documents in place.  The default rules that state law provide may not be desirable for you.

As a bare minimum, estate planning should provide documents that: (1) instructs who will inherit from you, (2) names who will be in charge of handling your affairs after death, (3) names who will be in charge of handling your affairs if you become incapacitated, and (4) names who will make your health care decisions if you become incapacitated.  Therefore, at a minimum, everyone should have THREE documents:  (1) a Will, (2) a Durable Power of Attorney, and (3) a Health Care Power of Attorney.

Will

A Will names a Personal Representative to handle your final affairs and states who will receive whatever you may own.  Dying without a Will is called dying "intestate", and the distribution of your assets will be governed by North Carolina's "intestacy" statutes.  If you have a child or children, then your child or children will receive everything.  If have no children, then your parents would receive everything.  If you have no children and no living parents, then the recipients of your stuff could be siblings, nieces and nephews, grandparents, aunts, uncles, or cousins (essentially your closest next of kin).  If you want to give anything to a friend or significant other, a Will is a must. 

If there is some reason to prevent your stuff going to your next of kin, then a Will is a must.  For example, if your father is receiving Government Benefits to pay long term care expenses through Medicaid, then allowing him to inherit anything from you would be wasteful.

Durable Power of Attorney

The Durable Power of Attorney (DPOA) grants someone the legal authority to act as your agent.  This document allows someone to manage your financial affairs for you, which would be necessary if you ever become incapacitated.  A single person who become incapacitated without a DPOA in place will have an unpleasant Court encounter.  For example, if your Mother is willing to handle your financial affairs if you become incapacitated, then to do so, absent a DPOA, she will have to sue you to have a Court declare you legally incompetent.  She will also have to petition the Court to be named as your Guardian.  As your Guardian, she can manage your affairs, but she will have to account to the Court each year on how she used and managed your assets.  A properly drafted DPOA can keep you out of the Court system by proscribing a private method of determining your capacity.  Alternatively, the question of your capacity can be sidestepped by making a DPOA effective upon signing.

Health Care Power of Attorney

Much like the DPOA, a Heath Care Power of Attorney (HCPOA) grants someone the legal authority to make your Medical Decisions.  Again, absent an HCPOA, you would have to be sued and someone appointed Guardian for you.  The DPOA and HCPOA work together to keep you out of the Court system if you become incapacitated.

Additional Documents

Additional documents to consider for a single person include a Revocable Living Trust, a Living Will and a HIPAA Medical Release form.

A Revocable Living Trust can be used to avoid Probate if privacy is a major concern for you.  A Living Will allows you to state your wishes about your life being artificially prolonged, and a HIPAA Medical Release form will make it easier for your loved ones to learn your condition if you are hospitalized. 

Conclusion

Single persons should have estate planning documents in place to avoid costly and embarassing Court procedures if incapacity occurs and to direct purposefully who will receive the assets at death and appoint someone to make sure the final affairs are properly managed.