Having an estate plan can be as simple as having a will. This is incredibly important, but people procrastinate about it more than just about any other step. Why? Because no one wants to talk about the fact that they are going to die someday.
Chaos Reins When You Die Without a Will or Estate Plan
When people die with no estate plan in place, it creates a huge, chaotic mess for the heirs to sort out. Significant amounts of money can be lost because if property ends up in probate, lawyers get a big chunk of that money, and it can take a long time before heirs receive any of those assets.
When you die without a valid will, it’s called “intestate.” A probate court will appoint an individual or firm to handle any claims that have been made against your estate, pay off all your creditors, and distribute whatever assets remain under the laws of that state.
Probate is the legal process of transferring the titles of property and assets from a deceased person to his or her beneficiaries. If the probate court determines that your will is valid and no one has any objections to your will, then all your creditors will be paid, and the remaining assets will be distributed based on the stipulations you made in your will.
You can avoid a lot of headaches by working with the appropriate professional to draw up a will, a health care proxy, a power of attorney, and a living will. That’s a starting point. You will need additional documents, such as a trust, if your financial situation is complex.
Don’t Let This Happen to You
It’s not difficult to find true stories about people who died without these important estate-plan documents in place. Many of them were either famous and were surrounded by advisors who could—and should—have encouraged them to get these documents in place. Again, procrastination and not wanting to face one’s own mortality are usually the reasons why these disasters happen.
- Prince
One example is Prince, whose full name was Prince Rogers Nelson. He died on April 21, 2016, at the age of 57 after being found unresponsive in an elevator at Paisley Park, his home and recording studio in Chanhassen, Minnesota. A toxicology report from Prince's autopsy revealed that that he had what multiple experts called an "exceedingly high" concentration of fentanyl in his body when he died. Fentanyl is the most powerful opioid in medicine. It's 25 to 50 times more potent than heroin and 50 to 100 times more potent than morphine, according to the US Drug Enforcement Administration.[1]
Two years after his death, Prince’s heirs still haven’t received any of his assets. But the executor of his estate and its lawyers have already collected approximately $5.9 million in fees and expenses. And they've requested an additional $2.9 million in fees and expenses. Not only did Prince die without an estate plan in place; he never even created a will. The executor of his estate can’t divide the money among his six surviving siblings until the IRS and the executor agree on the value of the estate when Prince died.[2]
- Joe Robbie
Joe Robbie was an American attorney, politician, and the principal founder of the Miami Dolphins. He died on January 7, 1990, at the age of 73. He had named just three of his nine children to act as his trustees and manage the Dolphins. This caused an epic rift in the family, who almost sold the NFL franchise to pay Robbie’s estate taxes. But in July 1992, they agreed on a settlement that kept the Miami Dolphins in the family.[3]
The feud pitted five Robbie children against their mother, who died in 1991, and four other siblings. The warring factions have agreed that the two-time Super Bowl champs were worth somewhere between $68 million and $87.8 million at the time of Joe Robbie's 1990 death. They also agreed that Elizabeth Robbie's estate will receive a good chunk, at least 30 percent, of whatever that agreed-upon value is. While that 30 percent originally was to be paid in an interest in the Dolphins, it may actually be paid in cash.[4]
While lawyers for both sides of the family said their clients are comfortable with the settlement, the banks that arranged the financing for the $115 million stadium Joe Robbie built in north Dade County clearly aren't. Representing the lenders, lawyer Jamie Cole asked Dade Circuit Judge Edmund Newbold not to accept the settlement until bank officials can determine what impact it will have on them.[5]
- Steve McNair
Steve McNair was an NFL quarterback for the Tennessee Titans and Baltimore Ravens. In 2009, when he was just 36, a girlfriend murdered him. McNair left behind a $20 million estate, a wife, and four children, but no will. Under Tennessee's intestacy laws, McNair's wife received only a portion of the estate, with the balance going to the two children she had with her husband and two other children McNair had out of wedlock. His mother, Lucille, received nothing. She lost the home he had bought for her. If he had just taken the time to make a plan, he could have minimized or totally avoided having his estate pay $3.7 million in federal estate taxes, plus Tennessee estate taxes.[6]
[1]. Meera Senthilingham, “Prince Had an ‘Exceedingly High’ Concentration of Fentanyl in His Body When He Died,” CNN, March 27. 2018, https://www.cnn.com/2018/03/27/health/prince-toxicology-report-high-fentanyl-levels-bn/index.html.
[2]. Mark Eghrari, “Two Years Later, Prince’s Heirs Have Still Not Received A Penny of His Estate,”Forbes, April 18 2018, https://www.forbes.com/sites/markeghrari/2018/04/18/two-years-later-princes-heirs-have-still-not-received-a-penny-of-his-estate/#551e24fb3ab2.
[3]. Maya Bell, “Feuding Robbie Heirs Settle Estate, Keep Football in Family,” Orlando Sentinel, July 29, 1992, http://articles.orlandosentinel.com/1992-07-29/news/9207290686_1_joe-robbie-dolphins-settlement/.
[4]. Ibid.
[5]. Ibid.
[6]. Julie Garber, “Celebrities Who Died Without a Will,” The Balance, November 14, 2016, https://www.thebalance.com/celebrities-who-died-without-a-will-3505108.