Aretha died last year and it was thought that she did not have an estate plan. Not even a will. Just to be clear, here are the basic components of an estate plan that you need to have in place:
If you have a will and not a living trust, then you are still subject to probate. You DO NOT want your assets or your family exposed to probate. It is time consuming, costly, and can tear families apart.
This is exactly what is happening to the assets and family of Aretha Franklin. Everything and everyone is in probate hell, but now there is a brand new twist. They just found THREE HANDWRITTEN WILLS and one of which was stashed under a seat cushion!
Now, the courts have to figure out if the wills are legitimate and untangle what exactly Aretha wanted to happen to her family and assets. You better believe this mess is going to mean more legal fees and family anguish.
There are so many lessons to be learned here. Let me unpack a few of the more important ones.
Don’t bury your head in the sand and not put a plan in place. It’s unreal to think that today, 60% of Americans still don’t have an estate plan in place. Are you one of them? Do you think it’s only about dying or that it will break your piggy bank? These excuses are not based on reality. Estate planning is about taking charge of your life instead of letting the government make decisions for you. There are plenty of planning strategies that you can take advantage of right now. It’s not just about death. Also, a properly built estate plan done by a professional does not have to soak up your vacation money. It can be extremely cost effective to get your plan in place.
Orchestrate a family discussion. As awkward as it may sound, having a discussion with your family about your estate plan can actually be a rewarding experience. Go out to a nice dinner with your kids or gather at home for a family meal with the goal of having a constructive conversation about your plans. Let your kids ask questions and get some input from them. Which child is going to be your trustee? Are they aware of this? Are your other kids going to be upset with your decision? Handle these issues up front and watch the family harmony ensue.
Another important point that you should consider is if you are passing along assets in the form of a percentage or dollar amount. Maybe you own property, cash and a business… What is the right formula for you? If you make a mistake here, you could have some unintended consequences that destroy that family harmony.
Is your planning updated? New laws have been released in the last couple of years that could impact the planning you already have in place. We all know life is not static, so is your planning keeping up with you and the changes in your life? This comes up a lot with people going through a divorce. When you get divorced you need a whole new estate plan. Often times people forget to do this and the consequences are horrible. For example, step kids can end up with your assets instead of your own kids or medical bills for your sick spouse end up draining your savings. Long term illnesses are real and we all have to think about how to avoid losing everything we have saved up.
Are your legal entities properly integrated into your estate plan? This is a biggie. Let’s say you have a Limited Liability Company for your rental income property. You need to make sure your LLC and your living trust are coordinated in the right way. Neglecting to figure this out could lead to some nasty planning and tax consequences. Make sure to figure this out.
These are just a few of the hot button issues you should be thinking about. Recently I sat down with one of my colleagues to ask him about estate planning and who really needs it. Take a peek at the short video below with our attorney, Brent Honea. Brent’s great and gives a thoughtful answer to the question. Be sure to subscribe to our YouTube channel when you watch the video so that you get notified when we push out a brand new hot topic video that impacts your planning.
As always, I want to thank you for taking a minute to check out our blog. As you may know, we like to offer our readers a free planning review. We love doing this because it’s a great way to help you to get educated on exactly how estate planning (and asset protection planning) applies to your situation.
If you want to see how the assessment works and some of the more common areas people ask for help, then click below. You can also sign up for your free assessment through that link.