Recently, I was invited into the Washington, DC Bureau to do a timely piece of the estate of Prince. His estimated fortune was in excess of 300 million currently, and this doesn’t include the recent or future sales of his records. As we have seen from legends such as Elvis Presley, money can be made off your name for many years into the future. The sad news came out that it appears Prince did not have a will. With one real sister and five half siblings it will surely be a mess to settle. Here are five really good lessons you can learn from the lack of planning Prince may have done with his estate.
- What If I Don’t Have A Will? – Here’s the newsflash. If you don’t have a will, then the state that you live in will have one for you. The problem with this is that you might assume all of your assets will go to your spouse or partner. However, property or assets that weren’t some form of contract (i.e. – JT Tenancy) could go 1/3rd to your spouse and 2/3rd’s to your children as it is in the state of Georgia. That could potentially cause a lot of problem for your family.
- Some States Are Better To Die In Than Others? – No, I don’t mean drag yourself across the border and die. In the United States there are 15 states that have estate tax (and the District Of Columbia) and six states have an inheritance tax. You should check out the rules of your state because in Minnesota (where Prince died), the estate tax will be 16% for everything above 1.6 million dollars for his heirs.
- Know What Is Protected Outside Of The Will – Whether you have a will or you don’t, there is a term known as a will substitute that you should be familiar with as you plan your estate. These include Joint Accounts and contracts such as IRA’s, 401(k)’s, and Life Insurance policies all of which have a named beneficiary. When you have a Joint Account or a contract with a named beneficiary, whomever you name on those contracts will get your assets no matter whether you have a will or you don’t. So, if you get divorced, remarried, or have family from multiple marriages, make sure you constantly update your beneficiary designations.
- Real Property And Probate – Even if you do have a basic will, your estate will go through something called probate. What most people don’t realize if that if you own real estate in states outside of your home state then it will go through probate in the state where it is located not where you are domiciled. This can cause your family a lot of time, energy, and money when they settle your estate down the road. You can set up certain trusts that will make this much easier if your estate plan is done well.
- Wills Don’t Have To Be Expensive – Most mere mortals don’t have an estate at 300 million. So, you can get a will done for a small amount of money on websites such as www.willmaker.com and www.legalzoom.com. However, if you have any level of complexity, its best to find yourself a good estate planning attorney. You can either pay now or as Prince’s heirs will find out you can pay later. Spending a few thousand dollars to protect the future of your estate is a smart money move.
We all shed a purple rain tear when Prince passed away. Try to take a golden nugget away on his estate planning mistakes and make sure you get your financial affairs in order.
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Ted Jenkin is a frequent guest columnist for the Wall Street Journal and Headline News Weekend Express. He is the co-CEO of oXYGen Financial. You can follow him on LinkedIn @ www.linkedin.com/in/theceoadvisor or on Twitter @tedjenkin.