Most people who have estate plans focus on leaving a legacy that transfers their assets to family members once they’re gone. Generational wealth refers to any kind of asset that families pass down to their children or grandchildren, including cash, investments such as stocks and bonds, real estate and family businesses.
As we’ve noted before, everyone has an estate. Your estate is simply everything you own, including your bank accounts, your home, your vehicles, your furniture, your keepsakes and even your beloved pet. However, not everyone has heirs.
An estimated 8,990 people die in the United States every day. Of those, 2 to 4 percent die alone, and their bodies go unclaimed after death — up to 148,000 people each year.
More Americans than ever are choosing not to have children. A study from the Pew Research Center found that the share of U.S. adults younger than 50 without children who say they are unlikely to ever have kids rose 10 percentage points between 2018 and 2023 — from 37 percent to 47 percent.
It’s less common for people to have no surviving family members. Only 1 percent of Americans say they don’t have extended family at all. That includes children, parents, grandparents, grandchildren, brothers, sisters, cousins, aunts, uncles and in-laws.
However, we wanted to bring this subject up because there are people who have no heirs, and many of them wonder if they need an estate plan. Some of our older clients live alone, and this is becoming a more common scenario.
According to the 2023 Current Population Survey from the U.S. Census Bureau, about 28 percent of people 65 and older live by themselves — slightly fewer than 6 million men and slightly more than 10 million women. (That figure does not include seniors living in institutions such as assisted-living facilities and nursing homes.). In 1950, only 1 in 10 older Americans lived on their own.
Just as everyone has an estate, even if their assets are modest, everyone needs to plan ahead, even if they have no heirs. You do not have to have family to leave an impactful legacy!
“Intestate succession” is the legal process that comes into play when someone passes away without leaving behind a valid will or other legally binding documents that specify how they want their assets and property to be distributed whey they die and no relatives can be found. In such a case, that person’s entire estate goes to the state in which he or she resided.
Here are three ways to leave a legacy, even if you have no family members.
1. Arrange for your own health care
Planning ahead isn’t just about transferring ownership of your assets. Make your own health care your top priority. Everyone — especially someone who has no family — needs an estate plan to outline what will happen if they become incapacitated because of illness or injury. We can help you get long-term care insurance in place so you will be taken care of if you can no longer care for yourself.
Health issues in retirement can have a significant impact on your savings. According to the U.S. Department of Health and Human Services, Americans have a 70 percent chance of needing long-term care after age 65. We all need to plan ahead.
Medicare generally does not cover long-term care insurance, and it’s expensive. The national median cost for a semi-private nursing-home room is $8,669 per month, according to the Genworth Cost of Care Survey. Medicaid is an option, yet you are required to deplete most of your assets to qualify, and the coverage might not meet your needs.
A hybrid insurance policy is a good option for some people. These policies combine long-term care insurance with permanent life insurance. They provide benefits without premium increases and can include a death benefit if you never need such care. Some life insurance policies also allow you to use a portion of the death benefit for care while you’re alive, offering a “living benefit” while still leaving something for beneficiaries.
Taking care of your own health-care needs in advance is an admirable legacy in itself.
2. Leave your assets to friends or charities
An important part of an estate plan is a living trust, which is a legal arrangement made by an individual (called the “grantor”) to protect his or her assets and direct how they will be distributed after death. The grantor designates a trustee — either an individual or a company — to control his or her assets. Your trust can name beneficiaries, just like a will does. You can name close friends or charities as your trust’s beneficiary.
Revocable trusts are more common than irrevocable trusts because they tend to be more flexible. You can change a revocable trust at any time, and you can manage your assets while you are still alive. However, a revocable trust will not protect your assets from creditors; only an irrevocable trust can do that. Also, revocable trusts will not save you money on your income taxes or estate taxes. We can help you determine which type of trust is best for your situation.
Another way to leave your assets to one or more favorite charities is to set up a donor-advised fund (DAF). This is a tax-efficient way to be a philanthropist.
A DAF is simply an account established at a 501(c)(3) public charity, which serves as a “sponsoring organization” that manages and administers individual DAF accounts that people have established. Your gift continues to grow in value, and you get to decide how to distribute the money, and to which charities.
With a DAF account, you will receive an immediate tax deduction once you make a charitable contribution, in the form of cash, stocks, real estate, fine art, cryptocurrency and other assets of value. Then you recommend grants from that fund over time. With this option, you get a tax break while you are still living, and your money continues to support charities you care about after your death. You can set up a scholarship, for example.
Making gifts and bequests to friends can be complicated, especially if you leave behind large gifts or assets other than marketable securities. There are tax and other implications we need to consider and manage. We will be happy to help you navigate the process.
3. Spend all of it!
Not everyone wants to leave their hard-earned money to someone else; many plan to spend all of it before they die.
Baby boomers are more likely than younger generations to spend down their life savings before they die. A 2024 study found that 45 percent of wealthy baby boomers (those with more than $1 million in investable assets) want to keep their money and spend it while they’re alive. In contrast, only 15 percent of wealthy millennials and 11 percent of wealthy Gen-Xers plan to spend all their money instead of leaving it to beneficiaries.
Many people worry so much about running out of money in retirement that they deny themselves the joy of creating memories and having priceless life experiences. Maybe you’ve heard about the “Die with Zero” philosophy. It calls for people to spend their money intentionally while they are alive so they can optimize their life experiences.
In 2021, Bill Perkins, one of the most successful energy traders in history, published the book Die With Zero: Getting All You Can from Your Money and Your Life. His logic is that any money you still have when you die represents time you spent working for free because you never got to enjoy that money.
Dying with nothing might be a bit extreme! We want to help you strike a healthy balance between having enough for the future and enjoying your retirement. This takes careful planning. Please reach out to us to plan for the future, whether or not you have family.
