Have you ever heard the saying “Where there’s a will, there’s a way”? Well, for millions of Americans the fact is that where there’s a will, there isn’t always an estate plan. Ask anyone if their estate plan is up-to-date, and you might get a lot of different answers. Some may have an estate plan that is woefully outdated, while others may not have so much as a will. Still, others might mistakenly believe an estate plan is something that only the rich and famous need, thinking that just a will is good enough for the average Joe. But a will is not the same thing as an estate plan, as the families of even wealthy celebrities have discovered the hard way. The recent deaths of cultural icons like Gloria Vanderbilt, Michael Jackson, and Aretha Franklin have brought the importance of estate planning back into the public spotlight. For these celebrities, just like for millions of Americans, proper estate planning would have prevented their heirs from winding up in long, expensive court battles over everything the deceased left behind.
Wills have been a staple of estate planning for decades, and are an important part of easing the transfer of property and assets to others after death. But wills are just one piece of the estate planning puzzle. Even when a valid will exists (or 3, in Aretha Franklin’s case!), your property and assets could still wind up entangled in probate court or other legal battles for years. While your heirs spend thousands on attorneys and wait for the slow grind of justice to take its court, your estate will be shrinking in value every day.
If you really want to maintain control over your money and assets after your death, you need a proper estate plan. Unlike a will, a quality estate plan will include things like a liquidity review, which will help you determine potential estate costs, taxes, and the income needs of your heirs. It is vital to ensure that your beneficiary designations are up-to-date, especially after all major life events like the birth or death of a loved one, divorce, or marriage. Your plan should also review your assets and contain accurate, updated information on the location and title of each one. In order for an estate plan to fully protect your assets after death, you must first ensure that each asset is correctly and legally titled. Improper ownership, such as not including a spouse or owning business assets personally, can wreak havoc on an otherwise effective estate plan.
The benefits of having a comprehensive estate plan are not hard to see. Take what happened after Michael Jackson’s sudden death in 2009, for example. Prior to his death, Michael Jackson created an estate plan which includes a Last Will and Testament and a Revocable Living Trust, called the Michael Jackson Family Trust. Because of this careful planning, Jackson’s three children, his property, and his wealth are all protected from legal battles and probate because the trust is the true governing document of his final estate.
This careful planning stands in stark contrast with the difficulties that the families of Gloria Vanderbilt and Aretha Franklin have faced. When Vanderbilt passed away in June 2019, no one knew whether she even had a will, much less an estate plan. The same is true of Aretha Franklin who died in August 2018. In both cases, wills were eventually found, but both estates ended up in probate anyway. That is because in the absence of an estate plan, it is the responsibility of the state probate court to determine the validity of the deceased’s will, appoint executors, pay off creditors, and the finally, distribute whatever assets are left. Even if the will is determined to be valid and there are no legal challenges to it, this process can take a very long time. And unfortunately, outdated estate plans are no better. Without an accurate and current estate plan, your assets could pass to unintended beneficiaries, the government, or be taxed at higher rates.
It’s not just the rich and famous who need to protect their assets from disasters like these. Everyone can benefit from planning carefully for the inevitable future and keeping things updated over time. Estate plans are not just a will – they are the way to protect your assets and your loved ones for good.