Lynda Doland, CPA, shares the complications that ensue for your family and loved ones when you’re not prepared with a will:
It is incredibly important not only to have a will or trust, but to also keep them updated. Don’t believe me? Let’s look at an example of someone who did not have the proper documentation in place: Prince, one of the most well-known musicians of all time.
Prince’s death without a will highlights the importance of estate planning. In Prince’s case, death in Minnesota without a will means that his half-siblings are entitled to the same share of his estate as his full sibling. In addition, anyone who could prove that he or she has a biological relationship with Prince (including child or niece/nephew) could stake a claim to his estate. This potentially opens the door to paternity tests and lawsuits before the estate can be settled. If Prince had a left a will, a roadmap would be there to divide his assets. Instead, there could be years of legal battles within his family.
Prince was also an extremely private person. However, now the court will have public record of all of his assets. A judge will also get to decide who can make decisions regarding the vault of unreleased music that he left behind. Without a will, the wishes and intent of the deceased person no longer matter.
Clearly, not taking this important step of estate planning can have unintended consequences. Even so, it is estimated that over half of Americans die without a will or estate plan. This may be because they do not want to think about getting older, or perhaps that they do not want to spend the money to properly plan their estates.
If you title your assets properly, you can ensure that you avoid probate. Assets that are titled only in your name will be frozen upon death until they are probated. For example, if you have a bank account that is titled just in your name and you pass away, an attorney will have to go through this court process and associated fees in order to get the asset moved to your heirs. If, instead, you had the bank account in either a title of Joint with Rights of Survivorship or with a Payable on Death (or POD) designation, all that’s required is for the spouse/child/named person to provide a death certificate in order to get the assets renamed after death. Note that investment or brokerage accounts use a designation of Transfer on Death, or TOD.
A trust works even better to accomplish this goal. Once your assets are titled in the name of your trusts, you can quickly change the designation of who your assets go to just by changing the trust- as opposed to contacting each banking institution or investment firm.
If you don’t have a will, you need to get to work on one. This is particularly important if you need to name a guardian for your children or you are operating a business. If you do have a will, be sure to revisit it to make sure that your financial situation has not significantly changed.
Please contact us if you need any guidance with the estate planning process. We are happy to help.