In her passing, Aretha Franklin joined a list of notable famous people who died without a will. Other famous members of this select group include Jimi Hendrix, Bob Marley, Sonny Bono, Stieg Larson (author of The Girl With the Dragon Tattoo), Pablo Picasso, DJ AM, Michael Jackson, James Brown, and Thomas Kinkade. In each of these cases the administration of the estate dragged on for years (30 years for the estate of Jimi Hendrix) at enormous cost ($30 million dollars in estate of Pablo Picasso). Aside from the agony and uncertainty of a prolonged estate administration, a tremendous amount of estate assets went to pay lawyers and other advisors which otherwise could have gone to beneficiaries.
The Queen of Soul’s passing serves as a good reminder of the many reasons why everyone needs to have basic estate planning documents. Unexpected consequences of tax law changes often create ripple effects that weren’t planned. As Congress starts taking away the states’ ability to piggyback on the federal tax, many tax commentators expect to see a return to the bad old days where every state taxing body had their own version of an estate or inheritance tax pop back into place to replace lost revenues. Although North Carolina abolished the estate tax for persons dying on or after January 1, 2013, other states still have notoriously draconian estate tax laws. This recent tax relief package is likely to create several new problems, and because the target is continually moving, the planning is more difficult, not less.
Hide and seek has no place in estate administration. While tax implications are often considered one of the principal reasons for estate planning, there are other important considerations for those left behind. A good estate plan addresses their needs for organization, closure, and security. If you’ve ever misplaced car keys or a wallet, you can think back to what it was that you were doing when you last had them in your hands. Imagine instead your heirs frantically poring over files, pawing through desk drawers, and searching the wastebasket for receipts in order to find answers after someone has passed away. Important documents need to be organized and easily found, and that doesn’t necessarily mean using a lockbox at the bank. In fact, your will and burial instructions are better stored some place easily reached by family or legal advisors, as safety-deposit boxes are often inaccessible after a death.
At a minimum you should have a will, a durable power of attorney, a healthcare power of attorney, a living will, and a stand-alone HIPAA release. If you are concerned about your beneficiaries making imprudent decisions with any assets left to them, or if you have a beneficiary who has special needs, then you should seriously consider using a trust agreement as well. Among other things a properly drafted estate plan lets you: (1) Choose Heirs; (2) Designate Guardians for Minor Children; (3) Establish Trusts for Minor Children; (4) Minimize the Cost of Probate; (5) Manage Affairs in the Event of Disability; (6) Treat Children from Previous Marriages Fairly; (7) Minimize Estate Taxes; (8) Protect a Family Business; (9) Make Charitable Donations; and (10) Disinherit a Child. If any of these circumstances apply to you, it is probably a good idea to have your estate planning documents reviewed by an estate planning lawyer. If you do not have the basic estate planning documents, you should meet with an estate planning lawyer to have the basic documents prepared.
Hagan Barrett, PLLC is a full service law firm serving businesses and individuals. We would be honored to assist you with your estate planning needs.