What is estate planning for if you don’t have children? Actually, a lot.

As a childless couple, you want to make sure your surviving spouse is taken care of, your pet will have a new home, the charities you like get supported, and your wishes for end-of-life care are respected.

So whether you’re a young couple starting out, or a retired couple tying up loose ends, here are the things you need to know about estate planning.

The Will

If you die without a will, your state will have to figure out whom to give your money and property to. It’s called dying intestate.

It’s true that there are situations in which you might not need a will. If you don’t have any real estate, or you don’t care who gets your money (or you plan on spending all your money before you pass away), and you don’t care who gets stuck executing your estate, then sure! Don’t spend the few hundred dollars getting a will drawn up.

But as an example of how great a will can be, here’s a frustrating scenario that Stephen C. Craffen, a Registered Financial Advisor with Stonegate Wealth Management in New Jersey and GuideVine advisor has seen: A young couple is engaged and buys a home together. The attorney draws up the papers and titles the house under tenancy in common, in case the engagement goes bad. But, they go ahead and get married. Mazeltov! A few years later, one spouse passes away. Because they didn’t get around to drawing up a will or changing the title, the state’s laws of intestacy apply. In New Jersey, for example, the parents of the spouse who passed away might end up owning a portion of the young couple’s home. Or their car. Or their savings account. (This doesn’t apply to IRAs or insurance.)

“It can be quite costly,” says Michael Terry, a Certified Financial Planner with MTP Advisors in New York.

So, you want to make sure property is titled properly. But more importantly, just get a will. “It’s the backstop, the fail safe solution,” Craffen says. “It behooves people to have a will, even a married couple with nothing.” It’s just good practice, he says, since you’ll start to accumulate property and assets, and then never get around to getting a will drawn up. “I would have one right off the bat.  A simple will could only cost you a few hundred bucks. For a married couple with no children, it doesn’t need to be very complicated. Have them done once and you’ll be good for years.”

Another good reason to get a will? So you can name your executor. This is the person who will sell your property, pay your taxes, and deal with all the other items related to tying up your financials after you die. You want it to be someone who is competent and has your best interests at heart, maybe a lifelong friend or the responsible cousin. But if you don’t specify in your will, the court will appoint someone. “You don’t want to leave some poor relative stuck cleaning up after you,” Terry says.

Beneficiaries

Designating beneficiaries is something that people with extremely simple financials might do to avoid drawing up a will. “If you just have bank accounts and IRAs and life insurance, you may not need a will,” says Craffen. You just name a beneficiary for financial accounts – your IRA, 401(k), investment accounts, and insurance.

“A beneficiary overrides any estate planning that you’ve done,” Terry says. So if you designate your sister as your beneficiary on your IRA, but in your will you say you want it to go to your nephew, it will go to your sister. So make sure your beneficiaries are up to date!

“I’ve seen it happen where people get divorced and didn’t change the beneficiary information,” Terry says. You should also have contingent beneficiaries, in case your beneficiary dies before you do.

Should You Get a Living Trust?

A living trust is when you put your assets – money, home, car – into a trust while you are still alive, and keep using them. When you pass away, the money simply and quickly transfers to whoever the beneficiary is. Whether this is useful depends on the state, Craffen says. In New Jersey, for example, probate is quick and painless. But in other states, it can be a huge pain. So before you let someone sell you a living trust, ask an expert in your state whether it’s worth your time and money.

Also, Craffen recommends a living trust if you have real estate in two or more states, say, a home in New York and a beach house in Cape Cod, which will save your estate from going through probate in two different states. Oh, and another tip: “A common mistake is that people don’t actually puts assets in trusts,” Craffen says. “Which defeats the whole purpose.” Then everything has to go through probate anyway. So make sure to actually transfer everything over if you decide to have a living trust.

Leaving Money to Charity

So you want to leave behind a charitable legacy? In that case Terry suggests you either say so in your will, or set up a charitable trust.

There’s two types of charitable trusts. One is a charitable remainder trust. You live off the assets of the trust, and when you die, the remainder goes to charity. “That’s what most people do,” Terry says. The other type is a charitable lead trust. You put assets in the trust, and the charity gets all the income off of the assets until you die. The remainder goes to whoever you will it to. Oh, and you get charitable deductions for this.

Most charities will be happy to help set up these trusts for you.

Power of Attorney

This is an “ absolute necessity,” Craffen says. “Here’s the scenario: Your spouse has a stroke. They’re in a coma, and they may not come out of the coma for a year or two. In the meantime, the financial aspects of your life have to move on. And you’re in the midst of selling a home, and the other spouse can’t sign anything. Power of attorney takes the place of that signature and allows the attorney in fact to sign on their behalf.”

How you craft that power of attorney is up to you. Springing means your spouse (or nephew, or sister) doesn’t get power of attorney until you are declared incapable of making decisions. Standing means they could sign on your behalf at any time. You can also specify what actions they can take. Maybe they can only handle real estate, or certain bank accounts.

Living Will and Health Care Proxy

These are another must. A living will specifies what you want to happen in the event you become incapacitated and doctors need a directive on whether to prolong your life with medical care. A health care proxy is the person you’ve designated to tell the doctors what to do in these situations.

Usually, the doctors would defer to the spouse, but not always. “Even if your spouse is still alive and you don’t have the health care proxy, a lot of hospitals will keep the machines going. They’re under no obligation to honor that,” Terry says. So make it official!

What About Your Pets?

Ah, the “furry babies.” If you don’t have children, you may be an especially doting parent to your animals. You certainly want to make sure that they don’t end up at the animal shelter after you pass away.

“You need to have an agreement with someone who is going to take the animal. I could put in my will that my sister is going to get my dog, but she’s under no obligation to do that just because it’s in my will,” Terry says.

Also, you can either will some money directly to the new owner, or set up a small trust for your pet. The new owner can use that trust to feed and take care of your pet. Just be aware that a trust costs money. “A trust still has to file a tax return,” Craffen says. “But if people have no other beneficiary, they may not be concerned with those costs.” You can also say where the remainder of that trust will go after the pet passes away.

Revisit the Documents

If you get many of these items in place, you’ll be well on your way to having an estate plan that takes into account your wishes and guards against unanticipated events. However don’t underestimate the need to revisit these documents.

Every once in a while, you should recheck them to make sure they are up to date and in-line with your wishes. You could have accumulated new property, had a falling out, gotten remarried, or become an uncle since you drew up these documents. “Pull these documents out once in a while and read them over,” Craffen says. “Nobody does it, but everybody should.”


Alden Wicker

Alden Wicker

Alden Wicker is a freelance journalist specializing in personal finance and sustainable lifestyle topics. She lives in New York, and is an expert at finding new and interesting ways of generating extra income. Her biggest budget weakness is eco-friendly fashion. Follow Alden on Twitter and Google+

5 Comments

Delores Lyon · September 4, 2015 at 7:38 pm

Thanks for sharing this advice on planning your estate as a childless couple. My husband and I fall into this category, so we aren’t really sure how to plan out our estate in the case that one of us dies. I really like your point on leaving money to a charity– since we aren’t financially strained at all, it would seem silly to leave money to the living spouse. However, if money went straight to a charity, it could help do some good, and help keep the estate organized! http://www.geoffwilliamsassociates.com.au/practice-areas

Ana Sollitto

Ana Sollitto · September 8, 2015 at 12:13 am

Hi Delores, glad you found the article useful and the point on charitable giving resonated!

Jarrett Pagni · November 23, 2015 at 2:12 am

Way cool! Some very valid points!

Jeff Madison · April 28, 2016 at 9:43 pm

I like your tip on designating beneficiaries in your estate if you do not have children. I would imagine that finding someone who you can trust would be really important when deciding who to leave your things to. My wife and I don’t have children but we’ve begun planning our estate so maybe we should find out who we should decide who will be in our will. http://www.cappolellalaw.com/practice-areas/estateswillsprobate/

Zequek Estrada · June 16, 2016 at 10:31 pm

I wasn’t aware that there was a term for when you die without a will. Estate planning sounds complicated but even more so if you don’t have any children. Though, I’m sure that getting professional help will make the process a lot easier. I wasn’t aware that there was a term for when you die without a will. Estate planning sounds complicated but even more so if you don’t have any children. Though, I’m sure that getting professional help will make the process a lot easier. http://jeconnor.com

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