It was surprising that Prince had no estate plan as he was otherwise a meticulous businessman. But without a will, his estate — and possibly his legacy — may be decided by his next-of-kin and the state of Minnesota, say several estate lawyers.
Dying without an estate plan is not so unusual, apparently. According to 2015 research from online legal services company Rocket Lawyer, 64 percent of Americans don’t have a will.
Perry Green, senior vice president and wealth strategist for Waddell & Associates in Memphis, Tennessee, says there are several reasons why some people are reluctant about estate planning.
“They don’t want to spend the money, they don’t want to talk about dying, or they have family issues that they don’t want to address. But … from what you see — the Prince issue is an overblown example — it ends up being a lot more complicated if you don’t do it,” Green says.
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Amy S. Ufberg, chairwoman of the private client group and a partner at Dechert in Philadelphia, says creating an estate plan, of which a will is a part, is something that people do for their loved ones.
“Having your estate plan arranged at the time of your death is a gift to family members — your spouse, children, charities, whomever you want to benefit having things in order,” Ufberg says.
Creating a plan. People can start by gathering important financial documents detailing a list of their assets and then decide who will receive those assets. “The key is to make sure that whomever you want to get your stuff is set up to get your stuff,” says Patrick Simasko, principal of Simasko Law in metro Detroit.
Name an executor of the will, and when listing recipients think about a Plan B, too.
“You may want everything to go to your three kids, but the follow-up question is, what happens if one of the kids dies before you? So his or her share should to go to the grandkids, to a charity or something else?” Simasko says.
This is also the time to set up care for underage children, children who have special needs, or to have provisions on how to control any inheritance for family members who have less-than-desirable traits. Wills can also disinherit family members, although spouses have some rights.
“There is no right to inheritance in the U.S.,” Ufberg says.
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Wills are one part of an entire estate plan. Other key documents are a medical power of attorney, also known as an advance directive, and a financial power of attorney.
Advance directives will define who makes medical decisions on the person’s behalf, such as keeping them on life support, if he or she cannot do so. The financial power of attorney appoints someone to help with money decisions.
Wills can also be used to put in directives for digital assets, such as access to email and other online accounts. David Slonim, elder law attorney with Slonim Law Firm in Melbourne, Florida, says unless people have given others prior consent to access their personal accounts before death, many companies’ end-user license agreements will prohibit accessing another person’s data. It becomes important when keepsakes like family photos are stored online.
“Even if it’s something that your family may use like a Netflix (ticker: NFLX) account and it is billed to a joint credit card account, it’s still under one person. So when that person dies, then that account is not available to be accessed by anyone else, unless they were given prior permission to do that,” Slonim says.
Revocable trusts, are increasingly popular, the attorneys say, as they help people avoid probate. Wills are public documents that anyone can read, while revocable trusts are private, so people who want privacy often go that route, Ufberg says. All wills go through probate, but revocable trusts do not, so to the extent the trust is funded during the person’s lifetime, those assets avoid the probate process.
Legal process. Wills can be as simple as someone handwriting how they want assets divided among their beneficiaries, getting two people to witness the signature and getting it notarized, Simasko says.
And, he says, the documents available via online services like Rocket Lawyer, Legal Zoom and Willing are similar to what estate lawyers use.
Green says for married couples who don’t own property, have no children and few assets, online services will likely provide what’s needed. But for people with property or children, seeing a lawyer can help coordinate documents and succession plans.
David T. DuFault, estate planning and business law attorney at Sodoma Law in Charlotte, North Carolina, says many people may not realize what makes up their estate.
“Most people are very familiar with their house and car, their life insurance at work, all these pieces. Getting in front of an estate planning attorney allows you to take an inventory of it and not miss anything,” he says.
A big issue, the attorneys say, is that some documents, like beneficiaries listed on retirement accounts or bank accounts, can supersede a will. That means if the person listed as beneficiary in a 401(k) is different than the person listed as beneficiary of that money in a will, the person named in the 401(k) will receive the money. It’s important all the names line up properly, whether using an online service or a lawyer.
DuFault says once the estate plan is created, people need to review them from time to time to ensure everything is up to date.
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“Oftentimes wills were created when people get married or have a child. But then they put them in a safe deposit box or in a vault in the house and never really think about them until something else happens,” he says.
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Prince’s Death Shows Why You Need a Last Will and Testament originally appeared on usnews.com
