If you are alive to read this, then it isn’t too late to plan ahead and create an estate plan. In fact, it doesn’t need to be delayed until you are close to death—especially if substantial assets are involved.
Thinking about death is hard. When it’s your own death, it’s even harder. However, thoughtful planning can make a tremendous impact on what happens afterward. Lawyers need to (and like to) get paid, but in many cases an ounce of prevention before one passes away will alleviate the need for pounds of cure in estate settlement afterward.
Here are two recent examples of admirable celebrities who didn’t plan ahead:
Pop star Prince died without having made a will or taking any other estate planning steps. What’s more, there were tricky questions about who his heirs would be, as he died without children or a surviving spouse. The estate’s executor had to attend to those matters at the same time that an inventory of Prince’s assets needed to be compiled and valued. Eventually six heirs were identified. Three of them sold substantially all of their expected inheritance to music company Primary Wave. The executor reported a total value for Prince’s estate of about $82 million. The IRS believed that his fortune was worth nearly double that, $163 million, which would have meant additional estate taxes of $32 million and a penalty of $6 million for the substantial understatement of the tax liability on the estate tax return. After a series of negotiations, the estate and the IRS reached a compromise, valuing Prince’s estate at $156 million, some six years after his death. Now that the tax issues are taken care of, the heirs can begin promotions of Prince’s music and likeness. Reportedly there are plans for music exhibitions, films, even Broadway shows. Primary Wave’s statement: “When we announced our acquisition of the additional expectancy interests in the estate last year bringing our ownership interest to 50%, our goal was to protect and grow Prince’s incomparable legacy. With the distribution of estate assets, we look forward to a strong and productive working relationship.”
The star of Black Panther, Chadwick Boseman, died at age 43 after a years-long struggle with colon cancer, something that he had kept completely private. He left an estate of $3.8 million before funeral and administration expenses, and he did not have a will despite his impending mortality. Boseman’s wife, Simone Ledward-Boseman, handled the settlement of his estate. Expenses included some $51,000 in unpaid taxes and the purchase to two mausoleum crypts for Boseman’s parents, as well as lawyer’s fees. Simone asked that the remaining balance of the estate, $2.3 million be divided equally between her and Chadwick’s parents, about $1.15 million each. Boseman’s two brothers did not share in the estate. One reason that the settlement of the estate was so costly and took two years was the absence of a will.
We can’t be sure that the distribution of the estate was in accordance with Boseman’s or Prince’s wishes, but needed to be guided by the laws of intestacy. Even if this was exactly the result Chadwick Boseman would have wanted, meeting with a lawyer to get his estate plan in writing would have saved considerable time and money.
The assets were tied up for a considerable amount of time because of the thorny issue of valuation.
Other reasons for estate planning
No matter how much Garden State Trust company preaches the merits of having an estate plan, we know there will be some who haven’t heard our message. There will be others who heard it, but didn’t pay enough attention. There will also be those that heard it, paid attention, and did well with it but we never found out because they went to someone else (we are still very happy they did).
As the cases above demonstrate, an estate plan can greatly shorten the time period needed to transfer assets so they can be utilized by those that need them. Administration fees might be reduced, and addressing valuation issues could help prevent litigation with the IRS.
It’s not all just about increasing the underlying value of the estate though. A good estate plan can be made to avoid family arguments and provide a lasting legacy. It can be made to pass on values that help increase the likelihood of good habits, wealth, and success in loved one’s lives. It can achieve charitable goals and finance a positive change in a stranger’s life.
If you’d like a consultation on your estate plan, we’d be pleased to become your partner.