I read a quote that caught my attention today: “If you don’t have an estate plan, the state you live in will give you one.” I’m sure you’ve all heard that the famous musician, Prince, passed away suddenly in April, and this is exactly what will happen to him. With an estate estimated at $250 million, surprisingly he never took the time to make a will or do any estate planning. Apparently he had a fear of signing legal documents since having problems with contracts in his early years as an emerging star.
According to Prince’s one full sister, he also had five half siblings. Under Minnesota law, full and half siblings are treated identically. Within 3 weeks of his death, hundreds of people had come forward claiming to be half siblings or descendants. 2 claims appear to be legitimate and are being investigated, one is claiming to be a half sibling and the other a child of his. It’s one thing to divvy up dollars among the heirs, but I can only imagine the disagreements that can arise when it comes to a guitar collection or an unfinished piece of music, particularly if some of the heirs are estranged. In the end, attorneys and federal and state governments will benefit greatly. I’m sure that was not his intention.
Although you may not have Prince’s millions, a will is important no matter what your net worth is. Having your wishes in writing will make it easier on your heirs. Without a will, distributing your estate can be a lengthy and expensive process. According to the American Bar Association, 55% of Americans die without a will or estate plan in place. In many cases, probate, the court-supervised process of settling a deceased person’s personal and financial affairs, can be avoided with proper estate planning. But currently probate proceedings cost Americans $2 billion per year, of which nearly $1.5 billion is paid in attorneys’ fees.
Estate planning is not all about death, it also means having documents in place should you become incapacitated. 3 crucial estate planning documents we recommend all clients have in addition to a will are durable power of attorney for health care and finance and a living will. Two separate powers of attorney are beneficial because individuals may choose different people to serve as power of attorneys for health care and finance as thy are very different roles. The word “durable” is also key here as that means the person named can make decisions for you if you are unable to do so. Without the term “durable”, a regular power of attorney ends at your incapacity which could result in your loved ones having to go to court to get the authority to handle your affairs.
A living will, also known as an advance directive, is a document that lets people state their wishes for end-of-life medical care in case they became unable to communicate their decisions. It’s not something anyone wants to think of, but by planning ahead, you can relieve caregivers of decision making burdens during a time of grief.
If you do not have all 4 of these basic estate planning documents in place, now’s a great time to do so.
