Some very famous people have died without a will—recently, singer/songwriter Prince in 2016 and now Aretha Franklin. I’m not sure whether this was a conscious decision by the artists or a failure of their managers and advisors to attend to these important matters.
Unfortunately, it’s not just famous people who often die without a will. A recent survey by Caring.com found that only 6 out of 10 Baby Boomers (ages 53 to 71) have wills, while only 36% of Gen Xers (ages 37-52) have them.
The importance of having a will goes beyond an orderly distribution of a person’s estate at death. If the person has minor children, the parent can designate who he or she wants to be a guardian for them.
Even for those who don’t have significant assets (a common reason people cite for not having a will), there are benefits of having one. The will appoints the person or persons who the testator (the person creating the will) wishes to administer his/her estate. If there is no will, the probate court will appoint someone who may not be the person the testator would have wanted to disburse the estate.
In Aretha Franklin’s situation, she had four children—one of whom has special needs. Under the state’s laws of intestacy (which governs the disposition of a person’s estate without a will), each child would receive a one-quarter share of her estate, reported to be in excess of $80 million. The problem with this result is that if the beneficiaries have any creditors (now or in the future), their shares can be subject to attachment. Furthermore, the special-needs child will likely become ineligible for government benefits under Medicaid. These problems could easily have been avoided if Aretha had a will providing for the estate assets to be held in further trust for the child’s benefit.
Another often-overlooked benefit of having a will is to save estate taxes for future generations. If the inheritance is left outright to a child who, accumulates significant wealth in his/her own right, such inheritance and any appreciation thereon may be subject to estate tax when the child dies. Since each person currently has an $11,180,000 exemption from estate and generation-skipping tax, if you leave up to that amount in trust for a child, the assets in the trust—plus all appreciation thereon—will continue to benefit future generations without incurring another estate tax at the child’s death.
Finally, in all proceedings involving the probate of a will or, as in Aretha’s estate, where no will is filed, the proceedings are a matter of public record. Many public figures (and private individuals) would prefer not to have the public know who they are disinheriting or leaving their estate to. They would be well-advised to execute a revocable “living” trust as a will substitute, which would, if properly funded before death, remain protected from prying eyes. Just like a will, a revocable living trust can be changed at any time. An additional benefit of using a living trust is the avoidance of probate costs and delays in administering the estate.
I will leave you with one recent case that I was retained for. It would have all been easily avoided if the decedent had a will. Instead, he died leaving four children to inherit the messy situation he left. He had several real estate investments and little in the way of cash or liquid assets. Two children were from his first marriage, one of whom was mentally disabled. The other two were born out of wedlock, one of whom was still a minor. So the court had to appoint a guardian for both the minor and the disabled adult. The disabled adult will lose her government benefits. Two half-siblings were appointed to be the estate’s representatives and they each hired their own lawyers. The result is inordinate delays, fighting among the estate representatives and significant lawyer’s fees before it’s all over.
If you wish to avoid these problems, get a will drafted by a competent estate planning attorney before it’s too late.
For more information, check out Gideon Rothschild’s website.