What happens when you die? Whether you believe in an eternal after-life, or that you come back as Aunt Polly’s cat, in the world of money you choose the answer. Depending on your choice, as an old Eagles tune says, it could be heaven or it could be hell for the people that matter to you. Planning, or lack of it, determines if there is life after death for your legacy.
Everybody intends to plan. Most don’t get it done. A Harris poll commissioned by Rocket Lawyer found that 64% of Americans don’t have a will. And when a person dies intestate, the state decides how property will be distributed. That means almost two-thirds of Americans have decided to let someone else choose the fate of what they leave behind. But it’s not a new problem.
Abraham Lincoln was the 16th president of the United States. He was also the first president to die without a will. As an attorney, you’d think he would have known better. Because of the generosity of many, President Lincoln’s lack of planning did not affect his family. That is seldom the case.
After eccentric billionaire Howard Hughes died in 1976, the courts declared him to have died intestate. The $2.5 billion estate was finally settled 34 years later. It’s been reported that more than 1,000 people benefited when the Hughes estate was distributed, including 200 distant relatives Hughes did not want to get any of his money. Oops! His wishes could have been honored if he’d planned ahead. His fortune did not have the life after death he wanted.
When Elvis Presley died in 1977 his estate was worth more than $10 million. Elvis thought having a will was all the planning he needed. But a will requires probate. By the time the process was over the Presley estate paid $7.3 million in taxes and fees that could have gone to Elvis’s heirs.
More recently, the death of Prince has the Tax Man rubbing his hands. Prince did no planning. His $300 million estate will go through probate. When all is said and done the estate will get hit with a 40% federal estate tax bill and the state of Minnesota will get an additional 16%. There’s a lot that could have been done to protect the assets but Prince, like two-thirds of Americans, just didn’t get around to it.
Your estate is important and planning what happens to it is important. Ask yourself:
- Is a will the best planning tool for my situation
- Do I need a trust rather than a will
- Does it matter if my estate goes through probate
- Do I want the details of my estate settlement to remain private
- Should one person settle my estate or multiple people with different skill sets
- Will I create problems naming a family member as my executor or trustee
These are just a few questions that will help you decide what planning is best for your situation. It’s not the most exciting way to spend your time but the payoff is tremendous. You get to decide what happens to your stuff when you’re gone, not some bureaucrat.
Even if you’ve done some planning—review. Make sure your wishes are up-to-date. Things change. For example, if you’ve divorced but haven’t updated your will, trust, or the beneficiaries on your life insurance and retirement accounts, your ex-spouse could get your estate, and wouldn’t that tick off some folks!
Google can give you a long list of people whose assets had a life much different than the dearly departed intended. Learn from their mistakes. Do some homework. Get expert advice. Create a plan that ensures your assets will be handled the way you want after you’re gone.
Remember, no planning, no control. But if you don’t care what happens, leave everything to the cat and let the kids fight about who gets Fluffy!
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