Eric Tolbert, CLU ChFC

Eric Tolbert and Associates, A Financial Advisory Practice of Ameriprise Financial Services, Inc.

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Estate Planning for Non-Traditional Families and Individuals

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When you think about someone who needs estate planning, do you envision a wealthy person or a traditional family with a mom, dad and two children? Just as financial planning is important for most people, estate planning is important for nearly everyone as well - not just for those with lots of money or traditional families. Single parents, unmarried couples and single individuals have unique needs to address through estate planning.

Single Parent

Single parents head up about one-third of the families with children in the U.S., representing nearly 11 million households in 2005. *If you belong to this growing group, take steps now to safeguard your children's financial future. (*Source: U.S. Census Bureau, American Community Survey, 2005)

A key priority is naming guardians for minor children. Without taking this critical step, the court will appoint a guardian for your children, and this might not reflect your wishes or best meet your children's needs. If you are unsure about whom to name, appoint a guardian and an alternate now, then change the designations later. If you are divorced and you die, your children will generally go to live with their other parent. The estate plan of the last parent to die controls the guardianship for the children.
Consider naming a trustee to manage your children's assets or finances. This could be the same person as the guardian or it may be more prudent to have a professional fiduciary to oversee assets for your children.
Evaluate establishing a trust for your heirs. A trust may provide more control over how assets are used to care for your children and at what age they may receive their inheritance. You also may avoid probate and access professional fiduciary management with a trust. If you have not made plans for effective oversight of your children's assets in your estate plan, the court may appoint a conservator at your death, supervise that person, and approve all major expenditures he or she makes.
Keep your beneficiary designations on investment accounts and life insurances policies up to date, since these designations take precedence over the provisions of your estate plan. In most instances, funds cannot be paid to minors; consider alternate agreements allowed by your state to control inherited assets for your children.
Create a financial power of attorney and a power of attorney for health care to help ensure that someone you know and trust is appointed to make financial and health care decisions for you if you are unable to do so.

Unmarried couples

In 2005, there were 6.1 million unmarried partner households in the U.S., representing 5.3% of all households. *Estate planning is critically important for members of this group since current law does not protect unmarried partners, no matter how longstanding or committed their relationship. (*Source: U.S. Census Bureau, American Community Survey, 2005)

Maintain an up-to-date estate plan, specifying who is to receive your property at death. While state laws vary, if you die without an estate plan and are not married, your assets typically go to your parents, then to your siblings if your parents are deceased.
Consider trusts to address special issues or if you wish to avoid probate or prefer professional asset management.
Prepare a durable power of attorney for health care naming the person of your choice as your agent to make health care decisions for you during illness or incapacity. This document also allows physicians to discuss medical treatment with your health care power of attorney.
Create a financial durable power of attorney enabling the person of your choice to make monetary decision and complete financial tasks for you if you cannot.
Update beneficiary designations on life insurance policies and investment accounts, checking on those created before your current relationship.
Consider holding accounts or real property in joint tenancy with rights of survivorship so that property passes directly to the surviving partner. In most states, "pay-on-death" or "transfer-on-death"accounts pass automatically to a designated beneficiary and avoid probate.
Consult with tax and legal advisor to assess potential estate and gift tax issues. There is no "marriage exclusion" when unmarried partners inherit and estate taxes may apply to larger estates. Additionally, unmarried partners need to keep detailed records to prove their contribution toward ownership of assets or gift taxes may be due.
Consider ways to replace a possible drop in the surviving partner's income due to the absence of spousal benefits from pension and Social Security.

Single People

Nearly 90 million people - 41 percent of the U.S. population over age 18 - were widowed, divorced or had never been married in 2005. *Many of these single people did not have estate plans. However, most single adults have debts, assets and family members; they need to leave instructions about how to settle their estates at death and make provisions for possible incapacity. (*Source: U.S. Census Bureau, American Community Survey, 2005)

Create a will or living trust to distribute your assets at death. If you don't write an estate plan, state law will distribute your assets for you! State intestacy laws generally pass your estate to your children, parents, or other relatives in a specified manner and proportions. With a will or trust, you can specify who receives your assets and what and how much they will receive.
If you have a sizeable estate, work with your legal and tax advisors to minimize taxes owed at your death and give as much of your property as possible to relatives, friends or charities.
Update beneficiary designations for retirement accounts and insurance policies. When you're young, single and starting out, it may make sense to name your parents as beneficiaries. But as your accounts grow and your parents get older, you may want to reconsider.
Create a financial durable power of attorney and a durable power of attorney for health care naming agents to make financial and health care decisions for you in the event of serious illness or incapacity. This could be especially important if you have no immediate family members to care for you don't want to leave this decision up to the court.
Provide for the care of your pet in your will or trust. Consult a legal advisor about naming a person or organization to care for your pet after your death. You also can set aside funds to pay for all aspects of your pet's future care.

Estate planning is important at every age and stage of adult life. If you have debts, assets and loved ones, you need a plan to manage your affairs at death and a safety net in case you cannot care for yourself.

Neither Ameriprise Personal Trust Services nor Ameriprise financial advisors are authorized to give legal or tax advice that goes beyond the scope of its fiduciary responsibilities associated with serving as investment agent or trustee. For legal or tax matters that go beyond these roles, clients will need to consult their own legal and/or tax advisors.

Financial advisory services and investments available through Ameriprise Financial Services, Inc., Member NASD and SIPC. Securities and mutual funds available through Ameriprise Financial Services, Inc. are not deposits or obligations of, nor guaranteed or insured by the FDIC nor any other federal or state agency and may involve investment risk, including loss of principal. Ameriprise Financial Services, Inc. is part of Ameriprise Financial, Inc.

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