Prince, the artist, was talented, creative, imaginative and extremely wealthy BUT had no foresight!
He had professional advisors including legal and financial all around him but no one managed to convince him to write something down for when he passed away. In spite of his estate being over US$300,000,000 in value.
There are death and transfer taxes in USA that if planning had been thorough (which always include beneficiary nominations) may have been reduced or mitigated.
As a result of lack of planning, his remaining family members will have a long and drawn out process ahead of them to have his assets distributed. As he didn’t write down who these should be to, there could be a further battle as to entitlement. We have also seen celebrities who have had other children pop out of nowhere as soon as they realise how much wealth is involved. This can hold up the distribution time! And create emotional havoc for those involved.
The more wealth you have, the more assets you buy and therefore the more planning you have to do. It is a financial responsibility to ensure that what belongs to you is given to the right people when you die … you cannot take it with you!
Although it can be difficult to keep track on tax legislation of where you hold your assets, as they are changing all of the time, it is advisable to speak to the people who would know. Imagine the shock of receiving a huge death tax bill by your loved ones? Or them not receiving what you thought they should? Or them not having enough money after a bill is paid?
You do not have to be wealthy to have a Will. Prince is an example of how chaotic it can be dealing with someone’s estate after they have passed away. His is an extreme dilemma but most people would have a similar turmoil of actions and processes, even if on a smaller financial scale without any instructions in place.
The civil service of any town or city, by nature is bureaucratic and orderly. Therefore trying to administer a dead person’s estate without direction would be even more so – the deceased is not here to defend or agree.
If you want your estate to go to the right people at the right time, you need to tell everyone when you die! You cannot leave it to the courts to decide for you as their distribution considerations would be on a larger scale than what you might want.
If you have minor children, you do not want family members fighting over the custody of them. Appointed Guardians are imperative to ensure that everyone understands where your children should live and with who.
All of these instructions can be written in your Will. Everyone with assets and/or minor children should have one. They do not have to be complex and once written, can sit in a safe place until needed.
You can also consider Trusts as these take precedence over your Will. There is no probate involved therefore they save time and legal costs. They provide liquidity for your loved ones. They prevent fire-sales of assets.