Everybody is speculating about who will inherit Prince’s $300 million fortune after his sudden death. According to his sister, the iconic singer did not leave a will, and with no spouses or children, it's up to the courts to determine where his millions will go.
Fifty-five percent of Americans die without a will or an estate plan. But you can make sure your loved ones and your legacy are protected. Valley-area financial professional Jim Dew from Dew Wealth Management is here to walk us through Estate Planning 101.
Q: Without a will, what will happen to Prince’s fortune?
• According to various estimates, Prince was worth $300 million, and his estate is expected to grow as sales of his music have exploded since his death.
• Prince was not married and had no living children or parents who could potentially inherit the millions to come from his estate.
• Without a will, Minnesota law -- where Prince lived -- states that his estate would go to his sister and his half-siblings. They would control his brand, including his record label and thousands of unreleased songs.
• His sister and half-siblings have already asked the court to appoint a special administrator for the estate.
Q: Why do so many people avoid the topic of estate planning?
• No one wants to sit around and think about what happens if they get sick, or worse yet, pass away unexpectedly. But that attitude is leaving you and your loved ones vulnerable.
• If you don’t have a plan, the state will decide one for you. It will most likely not be the same plan you had in mind.
• Some small and relatively inexpensive steps now will make sure you and your family are covered.
Q: If we have a will, isn’t that enough?
• A will is typically the first -- and sometimes only -- thing people think about when it comes to estate planning.
• A will is the cornerstone of an estate plan. It allows you to say who gets what when you die.
• A lawyer can help you draft a will or you can do it yourself online. It is a good first step, but it does not cover everything.
Q: What other documents should people consider?
Financial Power of Attorney
• This document outlines who you appoint to pay the bills and make financial decisions should you be unable to do so.
• You need to think about who you trust to take on this job, but also the scope of responsibility you will give them.
• They could be limited to everyday transactions, or you could grant them the power to sell real estate and give out financial gifts.
Health Care Power of Attorney
• This document would come into play if you are incapacitated and unable to make medical decisions.
• A durable power of attorney for health care, or an advanced directive, names and legally empowers a person to review your medical records and to make decisions, like where you should be treated.
• Regardless of age, you should think about doing this. Choose this person carefully and discuss your wishes with them ahead of time.
• This person will potentially have to make difficult decisions, so a close family friend or relative (who is not a spouse or child) may be a better choice.
• Keep in mind your financial and health care power of attorneys will likely have to work together, however it is a good idea to have two different people assume these roles.
• A living will is different that a healthcare power of attorney. It typically covers decisions made at the end of your life.
• A living will outlines what medical procedures you do and don’t want to have like when to resuscitate or discontinue life support, as well as what happens after you die.
• It can also be used as a guide by your health care power of attorney.
• I have a link on my website that can help you start putting a living will together.
Guardian for Children
• Appoint a guardian for your kids in your will.
• I recommend talking to the person you would like to select ahead of time and possibly naming an alternate guardian.
• If you do not appoint a guardian for your kids, a judge will choose someone.
• You may also want to name a different person as the custodian of any money or property your kids inherit to avoid conflicts of interest.
• You need to create a trust to outline how and when your kids get access to money they inherit.
• Life insurance policies, bank and brokerage accounts and retirement plans typically all have beneficiary forms.
• Make sure they are all up to date with the person you would like designated as your beneficiary.
• These forms typically override your will.
• You should update all of these forms every couple of years and after every major life change, including marriage, divorce, deaths or births.
There are a lot of moving parts and decisions to make with estate planning. I recommend you sit down with a trusted financial advisor and estate attorney to make sure you and your family are covered.
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