When a celebrity passes away, the general public is often reminded of the importance of Estate Planning. In the recent case of Prince, his estate is estimated around $300 million, with no evidence or record of a will having been done at this point. In addition to the usual assets left behind when someone passes, in this case there are also countless unreleased songs, music rights and intellectual property to consider. The result of a lack of planning? Most likely a long and drawn out expensive mess! Considering Prince's usual approach to handling his various other business affairs in life and being very hands-on and certainly no stranger to attorneys, it is surprising that a Will, Trusts or other Estate Planning documents were not put in place.
While your estate may be substantially smaller than Prince's, getting your affairs in order is just as easily important! One of the most basic questions that Estate Planning is meant to address is: Who gets what?
With a Will, you are able to determine where assets go! Without one, you are at the mercy of the state. For a married couple, the answer is often the surviving spouse with children or grandchildren (if there are any) as secondary beneficiaries. In addition, other common beneficiaries to name include relatives, friends or charitable institutions.
Some typical assets include:
- Real estate, both their home and other property
- Investments such as mutual funds, ETFs, stocks and others
- Retirement accounts such as 401(k) plans or an IRA
- Life insurance policies and annuities
- Stock-based compensation from an employer
- Interests in a business
- Collectibles and precious metals
- Personal property of various types
There are varying techniques to properly distribute these and other types of assets to your beneficiaries to ensure that they go to your heirs as intended.
Certain assets pass to heirs via beneficiary designations. These designations override anything that might be included in a will or anyplace else. Such assets include: life insurance policies, company retirement accounts such as a 401(k) and IRAs. For these and other accounts it is imperative that clients keep the beneficiary designations up to date.
For example, if a client remarries after a divorce, if their desire is that the current spouse benefits from their life insurance policy, then the beneficiary designation must be changed to reflect this. If the client’s ex-spouse was still listed as the beneficiary, he or she would receive the proceeds of the policy in their event of the death, regardless of your intent. For clients who are parents of minor children, a will naming a guardian for the children in the event that both parents die is a must. This goes beyond just naming a guardian — it is important to understand that you must ensure that the person(s) you name as guardian are willing and able to serve in this capacity if called upon to do so! It's important to revisit this decision periodically as well. Circumstances can change; no one wants the welfare or safety of children endangered in any way, whether they are minors or adult-disabled children.
Prince’s situation would have been simplified quite a bit just by the existence of merely a simple will. The key is putting together the right estate planning documents, that fit you and your family's situation and in getting the right type of advice from a certified elder law attorney!
Estate planning should not be thought of as a do-it-once-and-forget-it type of endeavor! It is important that you revisit your estate planning from time to time. As changes in life and financial situation change. It is critical to review periodic updates to your plan based upon changes in their situation as well as changes in laws and regulations surrounding estate planning. Give us a call to see how we can help you and your family plan for the future!