Retiring Without Heirs: 4 Ways to Protect Your Wealth and Spend It Your Way

A woman in italy — (Image credit: Getty Images)

Pam Krueger isn’t amassing a small fortune just to hand it over. While she plans to bequeath a gift to her beloved niece and nephew, the CEO is unapologetically putting her own needs first—planning her life around travel rather than a traditional legacy.

“I want to be able to rent a place for two or three months in Italy and Greece every year,” says Krueger, founder of the adviser-matching platform Wealthramp. “Why should I be ashamed to say I worked hard? I’m not planning my life around legacy.”

Krueger is part of a growing wave of solo agers. Without children to rely on for future care, she’s fortified her retirement savings to self-fund the what-ifs of aging.

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She isn't alone. Zach Ungerott, senior wealth adviser at Hightower Wealth Advisors, says more clients than ever are wondering: If I don’t have heirs, what should I do with my estate?

“It becomes a value discussion. Do they want to give money to a niece, cousin or do they want a large amount of the estate to go to charities?” says Ungerott. Do they want to leave nothing behind, spending down their entire nest egg?

Solo Aging: Why You Must Plan for the ‘What Ifs’ First

Deciding which way to go can be difficult, but Krueger argues that for solo agers, estate planning must come from a place of financial strength.

In her retirement, she envisions traveling the world, staying in luxurious hotels and enjoying high-end amenities. She’s also not frivolous. She has a dedicated plan for the "what-ifs."

That’s particularly important, given the high price tag for health care in retirement. A 65-year-old can expect to spend $172,500 in out-of-pocket health care expenses, according to Fidelity Investments' annual forecast. That doesn't include unforeseen emergencies or stints in a long-term care facility.

“If you don’t have heirs, it probably means you don’t have anyone to rely on for long-term care. What if you go into memory care? You have to figure out how you're going to cover the what-ifs,” she says. “Once long-term care is set up, you can use your money guilt-free.”

Who Will Speak For You?

But funding your health care is only half the battle; you also have to decide who will speak for you when you can't. After all, you don't have children or a spouse who will automatically be designated your proxy or power of attorney for your health care and financial decisions. It requires a different strategy.

If you don't have a spouse or adult child, a solo ager alternative for a power of attorney can include the following:

-A trusted friend or family member who can make the tough calls for you.

-A professional fiduciary that you pay to act as your agent.

The Guilt-Free Phase: Designing Your Heir-Free Estate Plan

Whether you want to leave your money to charities, give to loved ones, put your money to work while you are living or spend it, here’s a look at how you can make it happen.

1. Empower Your Chosen Family

Just because you don’t have children or siblings doesn’t mean you can’t leave your estate to someone you care about. A will and a trust are two common ways to leave assets to non-family members.

Nonetheless, they aren't as common as they should be. As it stands, 55% of Americans don’t have any estate documents, and only 31% have a basic will, according to a recent survey by estate planning firm Trust & Will.

Your will should lay out how you want your assets distributed and to whom. You can update this whenever you want.

Creating a revocable living trust is another option. The trust holds the assets, and you control how they're managed and distributed. The assets go to the beneficiary when you die.

For life insurance policies, bank accounts and retirement savings plans, name your friend or family member as a beneficiary directly with the financial institutions.

2. Launching Your Own Giving Fund

If you want to leave some or all your money to charity, options abound. There are donor-advised funds (DAFs), scholarships and grants, direct donations and a combination of all of the above.

Donor-advised funds are tax-advantaged charitable accounts that you invest in and have a say in where the asset is donated. You can donate cash, stock, real estate, fine art, cryptocurrency and other assets with value. You get a tax deduction for funding a DAF.

“One thing we've seen work well is simply creating donor advised funds which you could fund after your death," says Ungerott.

3. Give While Living

You can give to an organization or charity while you're living and get a tax break by transferring stocks, cash or other assets.

With cash donations to qualifying public charities, you can deduct up to 60% of your adjusted gross income (AGI). For donations of long-term appreciated assets, such as stocks, you can deduct up to 30% of AGI.

If you are 70½ or older, you can make tax-free charitable donations from your IRA, thanks to Qualified Charitable Distributions (QCDs).

“I’ve seen individuals set up scholarships and grants for schools, people, or specific fields or causes,” says Ungerott. ”You can set up a trust that will fund specific causes. You can set up legacy programs at institutions.”

4. Die With Zero

For some people, the idea of leaving any money behind is out of the question. They want to spend it until they're gone, what's known as the die with zero rule.

If that's appealing, Krueger says to make sure to check off all these boxes first: ample savings to cover expenses and emergencies, long-term care paid for and manageable debt. If you're going that route, it might be a good idea to work with a financial adviser who can help you determine your withdrawal rate.

Whatever you do, don’t wait until it’s too late

Estate planning should be part of your retirement, whether you have children to give your assets to or not.

It might be hard to think about something that is decades away, but planning for how your estate will be distributed while you're healthy and of sound mind is the best way to ensure your wishes are honored.

If you do nothing and something happens, your assets could end up in probate.

“If you want to support the Humane Society and it's not listed as a beneficiary, then it goes to the state courts to decide," says Ungerott. "Usually, that means it goes to the next of kin,” not the Humane Society.

Donna Fuscaldo is the retirement writer at Kiplinger.com. A writer and editor focused on retirement savings, planning, travel and lifestyle, Donna brings over two decades of experience working with publications including AARP, The Wall Street Journal, Forbes, Investopedia and HerMoney.