Estate Planning for Childless CouplesMay 21, 2019
There are certain things childless couples will want to pay attention to when crafting their estate plans. You want to make sure your surviving spouse is taken care of, your pet will have a new home, etc.
Families come in every shape, size and color. The traditional family structure, two parents, two children, house with a white picket fence, has certainly changed over the past 30 plus years. So, how does estate planning vary for various family structures, like the family demographic that is comprised of two working individuals with no children, for example?
This is commonly referred to as the DINK demographic – Dual Income, No Kids. What does this market mean for estate planning? At the core of this market, needs of individuals are not the same as the traditional family structure and these needs cannot be overlooked. This blog will look at some elements of estate planning that cannot be overlooked for the DINK demographic.
Common questions on estate planning for the DINK demographic:
Will I outlive my money?
A large concern among childless couples is that they will outlive their money. Couples without children do not necessarily need to leave money behind when they pass but they need to be aware of how their assets are allocated. Continually looking at your allocations and looking at different planning scenarios around how your assets will be drawn down in retirement is important. Some of the costly significant costs that are often overlooked are health care costs, nursing home costs and long term care costs. Plan for longevity!
How do I protect my spouse or partner?
If one individual dies or becomes incapacitated without a will or trust, it could leave the surviving partner without legal and financial protection. Wills, trusts and powers of attorney are all tools that can help in protecting a partner. Some upfront planning can provide adequate protection with the benefit of avoiding the probate process and maintaining privacy outside of public records.
How does healthcare planning work?
Establishing financial powers of attorney and a health care advance directive allows you to authorize an agent to manage medical and day-to-day financial affairs in the event of incapacity. These responsibilities include important medical decisions, financial transactions and providing for family members. Financial powers of attorney specify distinctions for scope and timing of control for financial transactions, claims and gifts. Health care advance directives include health care power of attorney, living wills and Health Insurance Portability and Accountability, or HIPPA authorization. These components authorize an agent to manage non-end-of-life health care decisions, specify end-of-life wishes and establish who can receive medical information on behalf of the patient.
How can I meet personal and charitable goals?
Without children, DINKs are not as concerned about preserving wealth for future generations, but may still want to distribute assets to friends, family members or charity. An estate plan helps you make these decisions in the most efficient way possible, designating who will receive what and when. Without an estate plan, those decisions can be left up to the court.
Many couples create a charitable remainder trust (Check out our blog, Close-up on Charitable Remainder Trusts), which allows couples to live off of the assets until death, at which time the remainder is distributed to charity. In the case of significant or complex charitable gifts, some may benefit from a separate charitable trust. These irrevocable trusts are an effective way to save on income and estate taxes and plan for charitable giving.
Are my pets provided for?
Pets are part of the family too and knowing that they will be taken care of when you are gone can bring you peace of mind. Specifically naming someone to take possession and care for them is one important step but another option to consider is to put aside money in a trust that is to be designated for the pet’s care.
In summary, individual and family needs are not the same as they used to be. The benefits and needs of estate planning vary from person to person. Some who are child-free may believe estate planning is not necessary. It is common for this group to believe that estate plans are only for the wealthy and for passing wealth down through generations. Others may get stressed out at the thought of putting together an estate plan and view it as a complicated process. To put it simply, everyone needs an estate plan to clearly outline their directives. Whatever the size of the family may be, a well thought out estate plan can help direct future uncertainly at any level. Let KLR Wealth Management, LLC help you chart the right course and help plan for a successful future.