Dying without an Estate Plan


Last week, Aretha Franklin-Queen of Soul, passed away from pancreatic cancer. This week, the New York Times reported that Aretha died without a will or trust. Her estate, roughly 80 million dollars, will now become a public nightmare. The nightmare will start in probate court where her children will attempt to divide Aretha’s assets and pay her debts. This process can take years before it is settled, often destroying family relationships, while leaving the IRS and litigation attorneys the real winners.
What is Estate Planning?

 Estate planning is the process of planning in advance to allocate your possessions to the people or organizations of your choice before death.  When you pass on, the whom, what and when needs to be answered for your assets and this is accomplished through proper estate planning.
  • Will and Trust. A will or trust should be the main component of your estate plan. Wills ensure belongings, normally items without titles, are distributed according to the wishes of the deceased. While trusts can help eliminate assets with titles from the reach of probate administration. Not only will a trust help reduce estate tax exposure, but provide specific distribution objectives. 
  • Durable Power of Attorney (POA). Designating an agent to act on your behalf, should you be unable to do so. If POA is absent and you are mentally incompetent, then a court will decide who will receive your assets. Your assets may not end up where you wanted.
  • Beneficiary Designations. Certain accounts do not need to be included in your will and can be passed on by simply listing a primary and contingent beneficiary. The account you invest in at your company’s 401(k) plan is an example of this. Make sure you list beneficiaries on the appropriate accounts.
  • Letter of Intent. A document that is left to an executor or beneficiary that may communicate specific instructions. It might have funeral instructions, special requests, or dialogue on what to do with a specific asset.
  • Healthcare Power of Attorney. Designates another individual to make important healthcare decisions on your behalf should you be unable to.
  • Guardianship Designations. Should you have children that are minors, it is important to pick a guardian for them if something were to happen to you. Normally, this can be incorporated into a will or trust, however it could be left out.

 It is worthy to note, proper estate planning is not just allocating your assets through a will and a trust. Other items to consider would be a durable power of attorney, beneficiary designations, letter of intent, healthcare power of attorney and guardianship designations. Listed below are a few details regarding each document.

 What Will Happen if You Die Without a Will and Estate Plan?
If an individual dies without having a will, then the state has one for you.  All states have a process that outlines who will inherit the assets. This is commonly referred to as dying “intestate”.  Aretha Franklin died intestate. The next step will be for probate court to follow their “intestate succession” rules. The court will decide if the spouse will receive the entire estate, or whether any children receive a portion. Other people related may or may not feel like they have a claim. For Aretha Franklin, she has 4 sons who will try to claim the estate. Challenges by others may be made. These are costly, lengthy and unnecessary with proper estate planning. 

Avoiding probate court not only saves time, but also a substantial amount of money.  It is far more expensive than establishing a will or trust. Without these documents, important decisions are left to the courts to decide and their decision may not be the same as the wishes of the deceased. It is critical not to leave decisions regarding guardianship, healthcare and assets distribution in the hands of a probate judge.

Bottom line

End of your life planning can be intimidating. According to a Caring.com survey, 6 out of 10 Americans have no estate planning documents. Remember, every individual has an expiration date. Nobody gets out of this world alive. Please review your estate plan. If you do not have one, please start on one today.  Contact us, we have several attorneys we can refer you to and who will help you get a plan in place. A little planning today can avoid huge problems later.

 The following post includes general information regarding wills and estate planning. This is not intended to be legal advice. Only attorneys can provide wills and estate planning advice. Please contact your attorney regarding your individual situation.  



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