If you don’t have children or plan to have children, many of the “default” settings for personal finance may not apply to you. For example, you may not want to leave an inheritance like many parents do, and you don’t have to worry about paying for your child’s wedding or college education.
But if you can’t make decisions yourself, who will take care of you or make decisions for you? For many Americans, the default answer is “my children.”
If something bad happens and you don’t have children to care for, things can get complicated quickly, says Maddie Roche, chief growth officer at ChildFree Trust, a trust firm specializing in childfree and permanently childless people.
“Think about the structures you have in place for having children, such as insurance planning, estate planning, and health care,” she says. “You can’t have an elective surgery unless you have an emergency contact. We run into these problems when it’s too late.”
The solution, she says, is to start thinking about these scenarios early. “Thinking about the future can be overwhelming, but one of the best ways to ensure you get the respect you crave and deserve is to be proactive,” she says.
plan proactively
Almost every financial expert will say that everyone needs some form of estate planning, whether they have children or not. This is an expression of how you would like your medical and financial decisions to be made in the event you die or become incapacitated.
This becomes even more important for people whose families deviate from the norm, Jay Zygmont, a certified financial planner who specializes in clientele without children, previously told CNBC Make It.
Health and government systems look for next of kin, so if you have an accident while out and about, for example, you may not have a clear person to contact, he said. “That means the government and the health care system are making decisions for you.”
To avoid this scenario, you should have documents in place, such as a power of attorney or medical directive. These documents have different names depending on the state, so consult an attorney about your specific needs. However, the point is that the document states your wishes and names a decision maker to take your place in the event you become incapacitated.
These wishes can be as important as whether you want to use a ventilator or as simple as what to do with your cat while in the hospital.
Nominate a trusted friend or relative
For many childless people, deciding who will carry out their plans involves some complex issues. For example, you may want to nominate a relative to oversee your care, but this could create a conflict of interest if that person stands to inherit your estate.
“Some people feel the need to offer financial compensation for these roles. For example, you have a long-lost nephew,” she says. “Are you sure he feels no conflict in helping you manage your affairs? If he feels his inheritance is at risk, are you sure that you will stay in the quality facilities you need?”
In some states, you may be able to hire a fiduciary to execute your estate, someone who is required by law to act in your best financial interests. But in most cases, you need to develop what Roche calls “strategic relationships” with trusted friends and relatives.
The key, she says, is to make sure you’re on the same page as soon as possible.
“You need to start thinking about your desires, make sure they are documented, and make sure the people you appoint really understand what you want,” Roche says. “Talk to people about what these roles are and what you expect of them. It’s important to think about that.”
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