NEW YORK (MainStreet) — A watershed demographic event occurred in the past few years, although without much notice: For the first time in U.S. history, there are more people who are single than married — 124.6 million singles (among 248.2 million people 16 and older) compared with 123.6 million who are married as of last year.
We'll leave it to the sociologists to figure out what that means demographically. Financially, singletons have their own challenges. Take estate planning.
"Everyone of majority age needs at the least a will, a health care directive and a named power of attorney," says Mike Sena, a certified financial planner with White Street Advisors, a money management firm. "The express purpose of estate planning is to make things as easy, as inexpensive and as simple as required for loved ones, friends and associates left behind. Every situation, every life is unique and some of us need more than others when it comes to estate planning."
Disability and long-term care insurance becomes more important to singles because "there is no spouse or partner to rely on for help with covering expenses in case of incapacity and inability to work," says Shelley Cabangon, a senior wealth planner at PNC Wealth Management in Palm Beach, Fla.
Married people also have a spouse who can make medical decisions on their behalf, but single people must plan for medical contingencies, says Karen Lee, an accredited estate planner with Karen Lee & Associates in Atlanta. "A single person needs to draft a durable power of attorney for medical and financial needs in the event they are incapacitated and unable to speak for themselves." Lee also says singles need to consider who will inherit their assets if and when they die — otherwise the laws of the state will prevail — which makes a living will with advance directives a good idea.
"I just had a client become disabled due to a brain injury," Lee says. "Although he had written a will in 1997, he never had a power of attorney. He was not only single and had no kids, he was an only child. There was no one to help make medical or financial decisions." Lee says her client's first cousin stepped up, but had to go to court to get granted conservatorship to make decisions on his behalf. "That took four months. And even after, all decisions had to be made with the court approval. It was a colossal mess," she says.
To streamline the issue, Jeffrey Carbone, co-founder of Cornerstone Financial Partners, a North Carolina wealth management firm, lists five key documents singles needs to have for estate planning purposes:
- Power of attorney. "That's very important, especially for a single person, as it allows for someone to act on your behalf if you are unable to do so," Carbone says. "You want to have someone you trust."
- Health care power of attorney. "This allows you to have someone make health care decisions if you are unable to," he says.
- Revocable trust. "A revocable trust is a private document to pass assets on," Carbone says.
- Living will. "This is a document that has your health care wishes known," he adds.
- Will. "A will is a public record to pass along and carry out your intent," Carbone says.
— Written By Brian O'Connell For MainStreet