06 Jul Single and Creating a Living Trust: Who Gets Your Assets?
We talk a lot about the importance of creating a Living Trust—the legal document that details how your assets will be distributed when you die, helping your family avoid Probate. For most of our clients, their assets will be distributed first to the surviving spouse, and then among their children. Our comprehensive Living Trust package also includes a Power of Attorney and Advance Healthcare Directive, and these are also generally delegated to spouses and children.
Estate planning for single people: what happens to their assets?
There are many successful people who have assets, are not married and don’t have children. These days, 1 in 4 adults over the age of 25 is not married; an estimated 15%-20% or more of women over the age of 40 do not have children. These single people well may work and have rich full lives, accumulating assets in the same manner as those with spouses and families. What happens to their assets when they die?
The succession plan, according to California law
If a single, financially successful person dies without having prepared a Living Trust, the estate goes into Probate. According to California law, parents are first in line to inherit the estate. If the parents are deceased, the estate would pass to siblings. If there are siblings who are deceased but have living children, the estate would pass to nieces or nephews. If there are no siblings or surviving family members of any kind, however, the estate would most likely eventually ‘escheat’ to the state, i.e., go into California’s bank account.
In the same way that married couples detail the way in which they will distribute their assets, single people must do the same. The difference is that for the single person who does not have any family members to inherit his/her estate, the State of California becomes the beneficiary. This is where it becomes critical to create and update a Living Trust.
There is an infinite number of ways for single people to distribute their estates
There may be other family members or close friends, however distant, to whom unmarried people want to leave at least a portion of their estates. They may be involved with a charity or foundation and want to allocate part of their estate to that cause. Many people retain strong ties to schools and colleges and leave their money to specific programs, fellowships and scholarship funds. There are countless organizations and institutions that have planned giving programs in which people are able to donate part of their estates upon their deaths. Many single people are involved in long-term relationships, either living separately or cohabitating for years, yet choose not to marry. They may want to leave all or a portion of their estates to their longtime companions.
The importance of updating your Living Trust
We always encourage our clients to update their Living Trusts and other documents with important life events—this normally means births, deaths and important investments. For a single person, life circumstances change as well. If, for example, a single person were planning to leave a portion of his or her estate to a sibling, but that sibling later marries a very wealthy partner, it may be that he/she would want to change the estate’s distribution.
Other California Document Preparers’ Blogs on related Living Trust topics:
Naming a Successor Trustee: A Lesson from Doris Duke and Her Butler
8 Signs That It’s Time to Update Your Living Trust
Have you created your Living Trust? Most of our clients are delighted with how easy the process was. The California Document Preparers team helps you through every step.