A Closer Look:
Estate Planning Without Heirs
What real-life planning situations require when traditional heirs aren’t part of the picture.
For many, estate planning follows a familiar path. A spouse is there to make decisions if something goes wrong, and children are expected to step in over time – helping to manage finances, make healthcare choices and ultimately inherit what’s left behind. But many older adults don’t have that built-in structure. Some are single, others widowed and some childless – and many are navigating all three. For them, estate planning raises questions that traditional plans don’t always surface on their own. Who will manage your finances if you become incapacitated? Where will your assets go after your death? Who can step in to make decisions around your health?
With no default plan to rely on, estate planning for this group requires more intentionality. Without it, decisions may fall to the courts rather than those you trust. Below are real-world scenarios that reflect the realities many single and childless people may face – and how thoughtful planning can address two key estate planning factors: incapacity and charitable planning.
Planning for Incapacity
John, a 60-year-old pre-retiree, became a widower just a few weeks ago. As he begins updating his account information, beneficiaries and legal documents with his Financial Advisor, he starts to wonder: If something happens to me, who do I want to manage my finances and make healthcare decisions on my behalf?
With no children to step in informally, his Financial Advisor recommends he create a formal support system now. While a father in a health crisis may have his adult children to pay bills, speak with doctors and coordinate care, John’s trusted friends or extended family may lack the legal authority – or simply be too uncomfortable – to take on these responsibilities. To prevent this situation, and even the potential of court-appointed guardianship, John works with his advisor to talk through the roles he may need to fill, and has thoughtful conversations with the people he trusts to ensure they’re comfortable stepping in if needed. From there, he puts key documents in place: naming those trusted individuals to serve as his financial and healthcare powers of attorney, while also documenting his care preferences through advance directives.
Even after formalizing these decisions, though, John’s incapacity plan still isn’t complete. While those appointments establish who can make choices if he can’t, they don’t necessarily ensure that day-to-day responsibilities – like paying bills, filing taxes or managing accounts – will continue as normal. By establishing a revocable living trust, John fills that gap and provides a clear structure for managing his financial life if he becomes incapacitated.
With a trust, John can continue to manage his health and finances as he always has while he’s healthy. But if his health changes, the trust allows a successor trustee to step in to handle his administrative needs. In John’s case, that role could be shared between his adult niece, Jill, and Baird Trust serving as co-successor trustee – combining Jill’s personal insight with Baird Trust’s professional expertise.
This structure can become especially key as healthcare needs evolve. If John requires in-home care or eventually transitions to an assisted living facility, the trust can support the financial side of these changes, from paying licensed care providers to coordinating the sale of his home titled in the trust. Rather than placing all responsibility on Jill during a stressful time, Baird Trust can help ensure John’s wishes are carried out consistently.
Choosing the Right People for Your Support Network
Single and childless individuals often have to choose people to step into estate planning roles that are traditionally filled by a spouse or children – such as helping manage finances, make healthcare decisions or carry out final wishes.
As you consider who you may want to step into these roles, ask yourself: Do they understand your values? Are they comfortable taking on this responsibility? Do they communicate clearly? In many cases, these responsibilities work well when they’re shared – like naming one person as a healthcare power of attorney and another as the financial power of attorney – so no one person feels overwhelmed.
Before formally naming someone, talk openly about the role: why you chose them and what the responsibility involves. Give them space to ask questions or say no – it’s vital that whoever you appoint is willing and prepared.
Good intentions alone don’t provide someone with decision-making authority, so formalize your decisions early. Thoughtful planning can help ensure the people you trust most are prepared to step in to support you with confidence.
Planning for a Charitable Legacy
Linda is a 71-year-old retired doctor with no spouse or children. Having already put plans in place to address potential incapacity, she now turns her attention to the legacy she hopes to leave behind. Over the course of her career, she has accumulated a significant amount of wealth – more than she expects to spend. And while she has no immediate heirs, she is passionate about philanthropy. As she ponders what a meaningful legacy could look like for her, she meets with her Financial Advisor to talk about how she can support the organizations near to her heart.
Without children or other heirs, the question for Linda shifts from who inherits her wealth to how it can best be used. And she has options: giving during her lifetime, after her death or through a combination of both. For Linda, seeing the impact of her giving firsthand was important. Knowing this, her Financial Advisor focuses on strategies that allow her to give now – while also laying out how her philanthropy could continue after her death.
- With a donor-advised fund (DAF), Linda could start contributing her assets to the fund now and recommend grants to charities over time. Plus, she could create an endowment-style plan that directs a set percentage of the fund to specific organizations each year after her death.
- Through qualified charitable distributions (QCDs), Linda could direct distributions from her retirement account to nonprofit organizations. This would allow her to use her required minimum distributions intentionally during her lifetime, rather than accumulate assets without a clear purpose – and provide the tax benefit of lowering her taxable income. While QCDs would only apply during her life, they could complement other long-term charitable strategies.
- Using a charitable remainder trust (CRT), Linda could contribute assets to an irrevocable trust that provides her with income during her lifetime, with the remaining amount benefiting the organization she chooses. In this case, a trustee – whether a trusted friend, Baird Trust or a combination – is named in the document to make sure the gift is delivered as she intended.
For parents, estate planning often focuses on things like dividing assets among kids, managing family dynamics and minimizing taxes. But for Linda, planning is centered on thoughtful use – which organizations to support, when the gifts should be made and even how her values can live on. By making these decisions now and working with an advisor who understands her intentions, she can create a charitable legacy that reflects what she cares about most.
For those who are single and childless, estate planning requires more intention – but it also creates more opportunity. With thoughtful planning, you can protect yourself, support the causes you care about and choose the people who will help carry your wishes forward.
To learn more about how you can incorporate these ideas into your own estate plan, reach out to your Baird Financial Advisor or contact Baird Trust.
Baird Trust Company (“Baird Trust”), a Kentucky state chartered trust company, is owned by Baird Financial Corporation (“BFC”). It is affiliated with Robert W. Baird & Co. Incorporated (“Baird”), (an SEC-registered broker-dealer and investment advisor), and other operating businesses owned by BFC. The information offered is provided to you for informational purposes only. Neither Baird nor Baird Trust is a legal or tax services provider and you are strongly encouraged to seek the advice of the appropriate professional advisors before taking any action. The information reflected on this page is subject to change. The information provided here has not taken into consideration the investment goals or needs of any specific investor. Investors should not make any investment decisions based solely on this information. Past performance is not a guarantee of future results. All investments have some level of risk, and investors have different time horizons, goals and risk tolerances, so speak to your Baird Financial Advisor or a member of your Baird Trust team before taking action.
