If you have a health crisis, many legal and healthcare systems assume you have a spouse or adult children to step in. However, for an estimated 24 million solo agers in the U.S., that's not the case. Solo agers are growing older without a spouse, partner or nearby adult children who can take on financial or medical decision-making roles.
Without a designated decision-maker, courts, hospitals and financial institutions fill the vacuum, and they won't know what you want.
An AARP survey found that 39% of solo agers feared having a court appoint someone to make decisions for them if they became unable to do so.
Estate planning can help you maintain control over your financial and healthcare decisions. This article explains where to start and how to begin the process.
Make a plan to protect your future. Join us for a webinar at 3 p.m. Tuesday, July 14 with Childfree Trust®, the first nationwide estate planning and fiduciary representation service specifically for childfree people.
Why Do Solo Agers Face Unique Estate Planning Challenges?
Solo agers face unique estate planning challenges, often without a built-in support network to serve as a second set of eyes on healthcare and financial decisions.
According to the University of Michigan Institute for Healthcare Policy & Innovation, more than half of older adults in the U.S. lack advance care planning documents. AARP reports that only half of solo agers have an advance medical directive, meaning many could face a medical emergency without documented instructions or a designated decision-maker. Without a healthcare power of attorney or advance directive, providers must rely on state surrogate decision-making laws, which may result in decisions being made by distant relatives, estranged family members or a court-appointed guardian.
Financial planning presents similar challenges. Without updated beneficiary designations, a durable financial power of attorney or clear estate planning documents, loved ones may face delays accessing accounts or managing financial affairs if incapacity occurs.
Financial institutions freeze accounts and assets in the absence of clear beneficiary designations or a named agent via power of attorney.
Because solo agers lack a spouse or close family member to help monitor these issues, the risks of overlooked documents or outdated plans can be greater. Kendal at Home care coordinators help members identify when it's time to revisit estate planning documents after major life events and can make referrals to trusted legal advisors.
What Are the Estate Planning Basics Every Solo Ager Needs?
Your estate planning checklist should include the following:
- Last will and testament. This document designates how your assets will be distributed after death and names an executor to carry out those instructions through the probate process.
- Durable financial power of attorney. This document names a person to manage your financial decisions and bank accounts if you're incapacitated. For solo agers, this person often needs to be a trusted friend, attorney, or professional fiduciary.
- Healthcare power of attorney/healthcare proxy. This document designates who makes medical decisions if you can't speak for yourself. It's critical that this person is reachable and willing to make decisions on your behalf.
- Advance healthcare directive/living will. These documents express your wishes for life support, end-of-life care and medical decisions in writing so your healthcare proxy has clear guidance. While every state encourages advance care planning, the legal documents differ. For example, Ohio and Kentucky recognize living wills through state law, while Massachusetts relies primarily on a healthcare proxy. In Ohio, the living will must be signed while the person has decision-making capacity and signed in the presence of either two qualified witnesses or a notary public. Kentucky law provides a statutory Living Will Directive form, and the Kentucky Attorney General provides public guidance and forms explaining your rights. For solo agers, the most important step is identifying and legally appointing a trusted person who can speak on their behalf when they cannot.
What Solo Agers May Overlook With Trusts and Taxes
A will is an important foundation, but it doesn't cover every aspect of estate planning. For solo agers, understanding trusts, beneficiary designations, and key tax considerations can ensure their wishes are carried out as intended.
- Revocable living trusts can help solo agers avoid probate court for assets held in the trust, potentially saving time and administrative hassle. They also offer greater privacy than a will because trust assets and distributions generally do not become part of the public court record.
- Beneficiary designations on retirement accounts, life insurance policies and bank accounts transfer assets outside of a will entirely. If these designations are outdated or incorrect, the assets may not go where you intended, and a will generally cannot override them.
- Estate taxes and inheritance taxes are taxes that may apply when assets are passed to heirs after death. Most solo agers will not owe federal estate tax because the federal exemption is currently $15 million per person, but state tax rules can vary widely. Some states impose their own estate taxes at much lower thresholds, making it important to understand the rules where you live and how they may affect your estate plan. Even if federal estate taxes are unlikely to apply, estate planning remains important for probate avoidance, incapacity planning, charitable giving and other financial and legacy goals.
- The annual gift tax exclusion is a federal tax rule that allows individuals to make certain yearly gifts without triggering gift tax reporting requirements. Solo agers may choose to transfer assets to family members, friends or other loved ones during their lifetime rather than through their estate. Understanding the annual gift tax exclusion and how it fits alongside charitable giving goals can help ensure those gifts align with an overall estate plan.
The 5 by 5 Rule refers to a trust provision that may allow a beneficiary to withdraw the greater of $5,000 or 5% of a trust's assets each year. Often used in certain irrevocable trusts, the provision can help balance a beneficiary's access to trust assets with broader estate and gift tax planning goals. Because trust provisions and tax consequences vary, an estate planning attorney or tax professional can help determine whether this strategy is appropriate for your situation.
Common Estate Planning Mistakes Solo Agers Make
Here are some of the most common estate planning mistakes to avoid:
- Naming no one or the wrong person. Failing to name a power of attorney or healthcare proxy, or naming someone who is not the right fit (e.g., a sibling who lives far away or a friend who has not agreed to serve), can create serious challenges if decisions need to be made quickly.
- DIY estate planning without legal review. Online templates can be helpful for very simple situations, but they may not account for state-specific requirements or more complex financial circumstances. It’s important to understand when professional legal guidance is needed.
- Forgetting digital assets. Online accounts, social media profiles, subscriptions and cryptocurrency holdings are often overlooked, yet they are an important part of a complete estate plan. Without clear instructions and access, these assets can be difficult for loved ones to manage.
- Not updating after major life events. Major changes, such as moving to a new state, selling property, the death of a named agent or significant changes to retirement accounts, are a signal to review your estate plan. According to a Caring.com survey, 23% of respondents had never updated their estate plan after creating it, and many others had not reviewed it in more than five years.
- Skipping the "who will actually do this" conversation. It's not enough to name someone in an estate planning document. It's equally important to have a clear conversation with them so they understand the responsibility and are willing to serve.
Build Your Complete Estate Plan Without Doing It Alone
Here's how to create your comprehensive estate plan in seven steps:
- Take inventory. List all assets, including real estate, bank accounts, retirement accounts, life insurance policies, and digital assets.
- Identify who you trust. For solo agers, this step can take time. Consider who may serve as your agent, executor, or trustee—whether a friend, family member, professional fiduciary, or attorney.
- Assemble your team. Work with an estate planning attorney for legal documents, a financial advisor for overall financial and retirement planning and a tax professional if estate or inheritance taxes may apply.
- Draft your estate planning documents. These documents include your will, trusts (if applicable), a financial power of attorney, a medical power of attorney, a living will, and an advance healthcare directive.
- Fund your trusts and update beneficiary designations. If you create a trust, it must be properly funded to avoid probate. It’s also important to review and update beneficiary designations on retirement accounts and life insurance policies.
- Store your documents in an accessible location. Make sure trusted individuals know where to find your documents, especially your healthcare and financial powers of attorney, in an emergency.
- Revisit after major life events. Estate planning isn't a one-time task; it's a living document that reflects your life. Review your plan after major life changes to ensure it still reflects your wishes.
Planning for Care: The Part Most Estate Plans Miss
Estate planning addresses what happens to your assets and financial decisions after death or incapacity. Care planning focuses on what happens to you, including supporting healthcare decisions, coordinating services, and ensuring your wishes are followed. For solo agers, these two types of planning work best when they are aligned.
Kendal at Home is designed to complement your estate plan by helping you navigate care decisions as your needs change. Our care coordinators get to know your situation, help you respond to health events, and connect you with resources and professionals before a crisis occurs.
The most effective planning happens before it's urgently needed, when there's time to think clearly and put the right supports in place.
Register for an upcoming virtual seminar to learn how Kendal at Home supports solo agers as they build a plan for the future on their own terms.