Equifax, a national consumer reporting agency, has announced an extensive cybersecurity incident involving unauthorized access to consumer information.
When rock legend Prince Rogers Nelson died unexpectedly last April, millions of music fans were stunned. But no doubt, so were his lawyers and other advisors.
Not only were they left with a tangle of financial and intellectual property issues to sort out, but Prince’s lawyers and other advisors also face a prolonged court battle to ensure that the people Prince cared about will be financially secure. Prince died without a will or trusts to manage his assets; consequently, a Minnesota probate court judge will decide who inherits what portion of his $250 million estate. That judge will follow state laws for distributions to heirs that may not reflect what Prince would have wanted.
Another result of not planning: Federal and state taxes on Prince’s estate could consume more than half of his money before the proceeds go to his heirs. Attorneys’ fees and court costs could gobble up even more. And the process could take years.1
Is your estate plan up-to-date?
Unfortunately, the story of Prince’s missing estate plan is not at all unusual. And it’s not limited to ultra-rich rock stars. According to a recent Gallup poll, 44% of Americans whose annual household income is $75,000 or greater do not have a will.2
But even if you’re one of the 56% who do have wills, you could still be at risk if you haven’t checked in recently to make sure that your will and other estate planning documents are up-to-date. Most advisors suggest taking a look at your estate plan every three to five years – or whenever your life situation changes.
“As your circumstances change, it’s important to update all aspects of your financial plan, including the key documents in your estate plan,” says Marie DelRossi, J.D., LL.M., Managing Director, Wealth Strategist at Boston Private Wealth. Some of the situations that can trigger a check-in are:
It’s especially critical for people to revisit their estate plans when they enter into business or professional partnerships, DelRossi says. “If you are doing business with a group of partners, you want to make sure all the partners have estate plans and buy/sell agreements in place if one of the partners were to die.”
The benefits of planning
The fact is, everyone needs an estate plan, she says, regardless of whether your assets are large or small. It’s a key part of the financial planning process because it gives you the ability to control what happens to your money and property when you’re no longer present. It also helps you:
Reduce stress – and legal hassles – for your spouse and loved ones
Organizing your assets now —making sure beneficiary designations are up to date and property is titled correctly or in trusts —and preparing the appropriate documents for future transfers will relieve others of the burden of trying to guess how you want decisions to be made after your death. It can help prevent the legal conflicts that arise when no direction is given.
A well-conceived estate plan is also essential for your well-being and your family’s financial security if you become temporarily incapacitated due to illness or injury. Considering that 1 in 4 workers today will be disabled for 3 months or more during their careers,3 a plan with the right documents in place becomes a smart investment of your time.
Transfer assets with tax efficiency
While having an estate plan doesn’t necessarily mean you’ll pay fewer estate taxes, there are situations where taxes on estate proceeds can be minimized or deferred to the next generation. For example, when you specify in your will that your spouse will receive all of your assets, he or she can take the full marital deduction. Any estate taxes due are then deferred until the death of the second spouse.
Make sure that your wishes are honored
Going through the exercise of creating or updating your estate plan also means you’ll have the right documents in place so that you —and not the courts —can decide:
Protect your family’s privacy
Because a will becomes a public record when it goes through the state probate/settlement process, many people opt to pass on their assets through trusts instead. Trusts are legal entities that are not subject to probate so they can remain private and provide money to beneficiaries more quickly. The privacy and flexibility offered by trusts make them ideal vehicles for implementing an estate plan.
Essential documents for an estate plan today
An estate plan helps you make sure that your property and assets are managed and distributed to your heirs according to your wishes. It also gives you a way to communicate your preferences for medical care when you are no longer capable of doing so. That’s why a basic estate plan today will typically include four types of documents:
Although preparing all of this paperwork is extremely important, “an estate plan isn’t just the documents,” DelRossi reminds us. “It’s thinking about how things are going to work and how to make managing a disability or illness in the future easier. It’s organizing your assets during your lifetime so they are available to those who depend on you.”
“I know it sounds corny,” she says, “but it is really an act of love. Organizing your estate plan and getting the information together in one place really is the best thing you can do for your family.”
Your Boston Private advisor is available as a resource to help you develop and implement the estate planning strategies that are consistent with your overall financial goals and appropriate for your personal and business needs. He or she is fully prepared to:
Your advisor can also introduce you to one of Boston Private’s Wealth Strategists, who can help you create trust solutions that match your unique circumstances. Boston Private is also prepared to serve as a corporate trustee in situations where an objective third party is required.
For more information on our estate planning services, contact your Boston Private advisor.
1The Battle for Prince’s Estate, people.com, June 27, 2016 http://people.com/crime/prince-estate-battle-list-of-alleged-heirs-who-he-owned-money/
2Majority in US Do Not Have a Will, Gallup, May 18, 2016 http://www.gallup.com/poll/191651/majority-not.aspx
3Chances of Disability: Me, Disabled?, disabilitycanhappen.org, July 3, 2013 http://www.disabilitycanhappen.org/chances_disability/disability_stats.asp