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With the recent death of the record artist Prince, it turns out that he did not have an estate plan. This was done when his estate was valued at over $250 million. In Prince’s case, many questions exist as to who gets the rights to his music. Millions are on the line in the form of royalties. Prince had no spouse or children. He has five half siblings and one sister. The primary beneficiaries of this failure to have a will be the State of Minnesota, the Federal government and (dare I say it) lawyers! There will be extensive litigation over this fortune. Whoever finally gets control of the estate, will pay hefty estate taxes. The taxes could have been minimized with planning. A trust or will could have been established which would have skipped generations and pay taxes far down the proverbial line. Why was this not done?
Many people refuse to deal with their own mortality. Even Abraham Lincoln died without a will. In California, you can make an estate plan all by yourself. A valid will can be done so long as it is entirely in your handwriting and is signed and dated by you. This is called a holographic will. What can you and I learn from this? The answer is simple: Make a Plan!
Wills can sort out many issues and give guidance. If you own a small business, who will take over if/when you die? If you have minor children (with or without special needs) who will care for them if you and your spouse die? You can have guardians for them established. A plan can keep our estate out of the court system. The American Bar Association estimates that $2 billion is spent in probate court. Of that total, nearly $1.5 billion is paid to lawyers.
Should you die without a will, the state where you die has a statutory plan to take care of your estate. This is called intestate succession. This may or may not mirror what you want. This may or may not have estate taxes paid the way you want. Guardians for minor children will be appointed if you do not have a plan in place for persons you want to assist your children. These people may or may not be the persons you want taking care of your children.
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Ensure that questions are answered so that lawyers do not get involved in sorting out what you may or may not have wanted. Ease any pain for those you leave behind. When you go, go on your terms, from the financial sense. The two things that are inevitable are death and taxes. Make sure you can control the tax part of your life and what happens after you leave, minimize the cost of your leaving, MAKE A PLAN!!!!
Chances are you worked very hard to make money and acquire things during your lifetime. Make sure that these things do not needlessly go to those whom you did not want them to go to.
What say you?
Did you have anyone in your family who passed without leaving behind a will?