On April 21, 2016, legendary musician Prince died unexpectedly at the age of 57. It is believed that he left no will that could provide guidance on how his estimated $300 million estate would be distributed after his death. This was very unfortunate for his potential heirs— and a lesson for you if you have not yet worked with an estate planner—as a legal battle between those who believe they have a right to Prince's vast fortune is now highly likely. Even worse, at least for his potential heirs, a huge chunk of Prince's estate will probably end up in the hands of the federal government because of the United States' death taxes. Sadly, these problems could have been avoided if Prince had just taken the time to work with an estate-planning attorney on a will and/or trust. Here's how you can prevent the same problems after you are deceased.
Make a Will
Maybe you think you're not rich enough to have a will. But, according to Forbes, having this document is important whether you are rich or just have modest means. And, as Prince's death—as well as the passings of Heath Ledger, Michael Jackson and Paul Walker—has shown, you never know at what age you may leave this planet. Not having a will means that, depending on the state you live in, your estate will probably go to members of your immediate family. Not on good terms with your estranged father? Unfortunately, without a will, your estate could end up with him rather than your live-in lover, who supported you through thick and thin.
Another reason to have a will? To protect your young children in the event that both you and your spouse should become deceased. For example, if you don't name a guardian who will take care of them, you could leave their young lives in limbo and, perhaps, with guardians you would not have approved of. Your attorney can also help you create a trust within your will so that you can leave your children assets for when they turn 18 or when they meet certain conditions that you can set forth.
Protect Your Estate from Taxes
The best way to make sure that the majority of your assets go to the ones you love and not to the federal government in the form of taxes is to work with an estate planner to create a living trust, which will allow your heirs to inherit your money without having to go through the costly probate process. According to the experts, in most cases, you will only need this type of trust if your estate is worth at least $2 million. Sound like a lot? Not really. If you own a house or other real estate, you may be closer to that figure than you realize.
Keep Your Will and Trusts Updated
Circumstances change. For example, let's say your will has all of your assets going to your second spouse, but the only problem is that you are going through a bitter separation. Unfortunately, your estate could end up in the hands of your soon-to-be ex-spouse instead of your children if you don't keep your will and trusts updated. So make sure to contact your estate-planning attorney whenever a change of circumstances occurs in your life.
If you are like many people, you probably don't like to dwell on your possible death and who should inherit your property. Yet, for the sake of your loved ones, it is important to take the time to consider how you want your wealth distributed if you should happen to pass away unexpectedly. Not doing so could mean that, like Prince, a large portion of your monies could end up going to the federal government instead of to the continuing support of your loved ones. Find an estate-planning attorney through a firm like Hurth Sisk & Blakemore LLP.
