Estate planning recently took center stage with news that singer, Prince died without a will or trust. Prince joins a long list of celebrities who died without an estate plan in place. This failure to plan is certainly not unique to celebrities. It’s estimated that close to 65% of Americans die without a will or trust.
So why is Prince’s failure to plan such a big deal?
· His entire estate, valued at around $300 million, will be distributed outright to each of his siblings. This means no provisions on how the money should be spent. No asset protection that a trust could have provided. Who knows what kinds of problems await Prince’s siblings with this new-found wealth.
· Prince was a philanthropist and supported numerous causes. He was also a devout Jehovah’s Witness. He could have established foundations to continue his legacy of giving. Think about all of the good that could have been accomplished with gifts to the charities and causes he supported. Instead, they will get nothing.
· For someone who went to great lengths to protect his privacy while living, he did nothing to keep the administration of his estate private. Since probate proceedings are public records, this entire process will be broadcast to the world. A trust could have kept this out of the courts and kept the estate administration private.
· Prince’s estate will likely end up paying estate taxes in excess of $100 million. A good estate planning team could have significantly lowered this amount.
While none of us will have this type of fortune to plan for, there are still important lessons to learn.
1. Now is the time to get it done. Estate planning is one of those things that people know that they need to do, but it always gets shoved to the bottom of the to-do list. Stop making excuses and make it a priority to get it done this month or this year.
2. It’s more than just planning for when you die. Most people overlook what happens when they become incapacitated and are unable to manage their financial affairs or make their own medical decisions. Through powers of attorney, you appoint someone to make decisions when you can’t.
3. Are you comfortable leaving an outright lump sum of assets to your kids? If you have children who have problems with addiction, who are in a profession that’s prone to lawsuits, are in a less than ideal marriage or have problems managing money, you should consider leaving their inheritance in a trust.
4. You’re not just doing this for yourself. I assure you that you will feel a sense of peace and relief knowing that you’re not leaving your loved ones a huge mess when you die.