During his successful career, Prince, who died in April at age 57, was known as a shrewd, control-minded businessman as well as a musical genius. That’s why it was so surprising that he did not leave a will specifying his wishes for the dispersal of his vast property and assets.
Because Prince failed to leave a will, his family members now face a potentially long, unpleasant struggle to divide his musical catalog and other assets. It’s a good reminder of why each of us should have a will: Not for ourselves, but to make things easier for those they leave behind.
You don’t need to have Prince’s level of wealth in order to benefit from having a will and an estate plan. Doing so can help spare those you care about from time-consuming legal fights. It can greatly minimize the taxes they will pay on their inheritance. And it can help to set their minds at ease about financial and other matters.
Amazingly, a reported 55% of Americans have failed to create proper wills and estate plans. Let’s look at the benefit to your loved ones of taking the time to create these plans.
• Probate costs. The assets of very wealthy individuals can end up being subject to a burdensome federal estate tax. But a bigger concern for most is the expense that comes from court costs and lawyer fees. If you die “intestate”—without a will—your loved ones will face so-called probate costs, which can total as much as 8% of a person’s estate.
• The probate process. The probate process can last between several months and, in complex cases, several years. It’s an ongoing source of hassle and stress for those you leave behind, who may face an obstacle course of legal proceedings and court dates.
• Tax mitigation. Even if you don’t leave an estate that’s large enough to trigger the estate tax, taxes should be a key element of your planning. For instance, your beneficiaries will have to pay taxes on assets they inherit in a tax-advantaged retirement plan such as a 401(k) or IRA. With proper planning, strategies can be put in place to help ensure that they don’t end up with a larger-than-necessary tax liability when they withdraw those funds.
• Guardianship. Those with young children can use their will to designate guardians. And they can establish trusts so that a trusted individual can make financial decisions for minors who can’t yet manage their own affairs.
The time to create your legacy is when you are alive and of sound mind. Your passing will create grief and upset among those you love, but by taking care of business now, you can spare them from needless uncertainty and conflict. Please don’t hesitate to contact us if you’d like to learn more.