When legendary singer Aretha Franklin died last week at age 76, she did not have a will or trust, according to documents filed in Oakland County Probate Court. And now the $80 million estate of the intensely private Queen of Soul is about to become very public – and possibly very taxing for her heirs.
Apparently, Aretha’s lawyer of nearly 30 years told the Detroit Free Press that he was constantly asking her to do a trust, but she just never got around to doing it.
“I was after her for a number of years to do a trust,” Los Angeles attorney Don Wilson told the Detroit Free Press. “It would have expedited things and kept them out of probate and kept things private.”
This breaking news should teach all of us a lesson or two about Estate Planning, Let’s discuss:
Basic Estate Documents Are for Everyone, not just for the rich
I have heard numerous times – from my acquaintances, my clients, my prospects – that Wills are only for the rich. This, in fact, is one of the most dangerous myths of Financial Planning. Here is why.
Although many of us generally do not have sufficient wealth to trigger estate tax liability (more so in the new tax law), that does not mean we do not need to have a Will. There are a variety of non-tax considerations we should think about when planning smooth transition of the estate to our heirs.
At a minimum, basic estate documents such as wills, financial power of attorney, medical power of attorney should make it to everyone’s must-have list.
For example, do you know that your 25-year old single child should have these documents? In the absence of these documents, contrary to what you might think, you will not be able to make financial or medical decisions on behalf of your child god forbid something happens to him or her.
Here is another example: If you and your spouse own a property jointly, and one of you is incapacitated and is not in a condition to signing documents – the other spouse will not be able to sell the property without having a properly executed financial power of attorney. Scary. Isn’t it?
Lastly, here is the most dangerous and chilling situation: If you have minor children, and die without a will, who gets the guardianship of your children is left to the courts to decide. I have a friend once tell me extremely confidently – they don’t need a will – their older child (who is not a minor) will take guardianship of her younger siblings if something happens to them. I was concerned about my friend when I heard it. Here is the point my friend missed – in the absence of a Will, his adult child becoming a guardian to her younger siblings is not automatic. She needs to go to the court and prove to the court that her guardianship, indeed is, in the best interest of her siblings.
So, basic Estate documents are not just for the rich, they are for everyone – the young, the old, the rich, the not so rich, the singles, the couples – everyone!
Estate Planning could be difficult and emotional, but you have to do it
The process of deciding who should be the guardian of your children, who should you pick to execute your Will, how should you allocate your assets among your heirs, is quite involved, and I admit – this is far from easy.
In addition, thinking of incapacity and death, framing the Will, how to divide your Estate could be very emotional. In fact, I came across some people not willing to go through the process at all, as it reminds them of their own mortality. I even heard some say they are tempting fate by creating a will.
While the difficulty and the emotional toll the process takes on you is understandable, lack of planning is even worse – for you and your heirs. You will miss out on the peace of mind aspect not knowing what would happen if you are incapacitated or pass away. And your heirs could be spending a lot of time and energy in figuring out how best to implement your wishes.
Is this really what you want? My guess is no. So, the best course of action is – understand it is going to be emotional, understand the process is quite involved, but do it anyway and do it soon – for your happiness and for the happiness of your heirs.
What next after You ensure Estate Documents are in place
Let’s say that now you are finished with your Estate planning – i.e., you worked with your Financial Planner and attorney and have all the necessary legal documents in place. Are you really done? Yes, for some, but for others, absolutely not. What else could be left?
Don’t ignore that an estate plan is an intimate subject. Here are few things to consider once you have the plan in place:
Sit down with the kids and make sure they understand all that you have done. No, you don’t have to go into all of the intimate details of your personal finances, but give them a high-level overview of your personal wishes for final arrangements and an explanation in general terms of what will happen. These conversations will do a great favor to your heirs and help them manage your Estate after you are gone.
Secondly, if you are the owner of a closely held business in which one child is involved and others are not, ensure you have a succession plan in place.
Lastly, here are some family related questions that you should think about:
Are you worried about your daughter being married to “that bum,” or a son married to “that woman?” So, do you then decide to leave their assets in a trust, rather than outright? Are you excluding a child or perhaps favoring others? What about the child that is taking care of you in your later years: Do the other children appreciate how you might treat the caretaker differently? Maybe you want to give it all to charity; will the kids understand? What about a child with special needs? The list goes on and on.
The best remedy is to be able to sit down with the family and explain it all in advance. Sure, it is hard in some respects, but it may just keep the family together.
Famous Last Words
“As a parent, you try to maintain a certain amount of control and so you have this tug-of-war…You have to learn when to let go. And that’s not easy.”
~ Aretha Franklin
So, what you think? Do you have your Estate documents locked in place? Did you set up your Will such that your assets pass to your beneficiaries as per your wishes? If not, do not delay- now is the time to act. Let me know if you need help. Best of luck!
