If you don’t have children and don’t plan on having any, many of the “default” settings of personal finance may not apply to you. You may not, for instance, plan on leaving legacy wealth, as many parents do, and you certainly don’t have to worry about paying for a kid’s wedding or college education.
But who will take care of you or make decisions on your behalf in the event that you can’t make them for yourself? For many Americans, the default answer is, “my kids.”
If something bad happens and you don’t have children who will take care of you, things can get complicated quickly, says Maddy Roche, chief growth officer at Childfree Trust, a fiduciary firm specializing in childfree and permanently childless people.
“Think about some of the structures that assume that you have children, whether it be insurance planning, estate planning, medical relationships,” she says. “You can’t get an elective surgery unless you have an emergency contact. Those are the things that we run up against when time’s too late.”
The solution, she says, is to start thinking about these scenarios early. “As hard as it is to think about the future, one of the best ways to ensure that you’ll be respected in the ways that you crave and deserve is to be proactive,” she says.
Be proactive in your planning
Just about every financial professional will tell you that everyone — whether you have kids or not — needs some form of an estate plan, which expresses how you’d like medical and financial decisions to be carried out in the event of your death or incapacitation.
This becomes even more important for people whose family strays from the norm, Jay Zigmont, a certified financial planner specializing in childfree clients, previously told CNBC Make It.
Because health care and government systems look for next-of-kin, there may be no one obvious to contact in the event you get into an accident while out of town, for instance, he says: “That means the government or health-care system will be making decisions for you.”
To avoid those scenarios, you’ll need documents in place, such as powers of attorney and a health-care directive. These documents go by different names in different states, so talk with an attorney about your specific needs, but the gist is that they lay out your wishes and designate a decision-maker for you should you become incapacitated.
These wishes could be as consequential as whether or not you want to be on a respirator or as straightforward as what to do with your cats while you’re in the hospital.
Designate a trusted friend or relative
For many childfree people, figuring out who will execute your plan comes with some complications. You may, for instance, want to nominate an extended family member to oversee your care — but that could create conflicts of interest if that person stands to inherit your estate.
“Some people feel like they need to offer monetary compensation for these roles. Say, for instance, you have a long-lost nephew,” she says. “Are we sure he won’t feel conflicted in terms of helping you manage your affairs — that you’ll stay in the kind of quality facility you need if he feels his inheritance is on the line?”
In some states, you may be able to hire a fiduciary to execute your estate — someone who is bound by law to act in your best financial interest. For the most part, though, you’ll have to cultivate what Roche calls a “strategic relationship” with a trusted friend or relative.
The key, she says, is to make sure you’re on the same page as early as possible.
“You need to start to think about your wishes and make sure they’re documented and make sure the people you’re nominating really know what you want to happen,” Roche says. “Talk with people about what these roles are and what you expect of them. It’s all important to be thinking about.”
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