There’s a calm comfort that comes with estate planning: a sense that your family will be taken care of after you pass away (hopefully at a ripe old age). Sadly, it doesn’t always happen that way. Skipping regular estate plan reviews can lead to forgotten details, and these can create confusion and havoc for your family – or suck them into a time-consuming court case to iron everything out. Unfortunately, that was the case for these high-profile individuals and their loved ones.
Back in 1998, after Sonny Bono’s untimely death in a skiing accident, we learned he never wrote a will. And a man claiming to be an illegitimate son attempted to get part of the Bono estate, as did ex-wife Cher, with whom he shared royalties on music they made together. His blended family became a public spectacle at a time of grief and uncertainty.
Avoiding the Oops: Resolve to write a will as soon as possible, and keep your beneficiaries updated. Everyone over 18 needs an estate plan that includes a comprehensive will (at the very least) and properly documents your wishes. Remember, life can be unpredictable, especially if you have a complex professional or personal life.
The Girl Without a Ring
Stieg Larsson, author of The Girl with the Dragon Tattoo, was devoted to his girlfriend of 32 years. When the Swedish author died without a will, his entire estate was divided between his father and brother in accordance with Swedish law. His beloved was left out, legally speaking.
Avoiding the Oops: Resolve to learn how estate laws affect nontraditional relationships. Learn and understand the laws that govern transfer of property in your chosen state or country, so you can protect the interests of those you love. And don’t presume others will honor your wishes without a written directive. Beyond writing a will, asset titling is especially important when you’re in a “nontraditional” relationship. Legally, your partner may not have the same rights a spouse would.
The Injustice of It All
Former Supreme Court Justice Warren Burger presided over his own will, penning a brief 176-word declaration. But the poorly-executed document left his family with more than $450,000 in estate taxes and court fees that could have been avoided.
Avoiding the Oops: Trust a qualified estate planning professional to help you write your will and other estate planning documents. To find one, ask for a referral or visit the American Academy of Estate Planning Attorneys or the National Network of Estate Planning Attorneys. Most of us have limited expertise when it comes to complicated tax and estate planning, and even though dedicated software can help you create the necessary documents, it’s still a good idea to have an estate planning attorney review what you have.
No Laughing Matter
Dark Knight actor Heath Ledger drafted a will naming his sibling and his parents as beneficiaries. Sadly, he didn’t update it after the birth of his daughter, Matilda. When he passed away unexpectedly, there was great confusion about who were the rightful heirs of his estate, and the difficulties played out publicly.
Avoiding the Oops: Resolve to review your plan any time your life changes. Remember that every life event – births, adoptions, disability, deaths, marriages, divorces, even moving – should trigger a review and update of your estate documents. If any of these events occur in the life of a beloved beneficiary, take note! That requires another look, too.
Michael Jackson created a trust, but it seems the king of pop may not have fully funded it. As a result, members of his famous family fought in probate court – and in the media – before settling the estate.
Avoiding the Oops: Resolve to retitle assets in a trust’s name. Work with your financial team to name your trust as the owner of the assets you want it to control. For example, changing the title on your house from “Sarah and Mark Jennings, Joint Tenants with Rights of Survivorship” to “Sarah and Mark Jennings, Trustees of the Jennings Revocable Trust dated January 4, 2014” means that the trust is now funded with your primary residence. Without this retitling, the trust is an empty shell, and you’ve likely wasted time and money setting it up in the first place. To find out if a trust makes sense for your family, consult knowledgeable estate planning professionals to learn more about the various types.
Changes in tax laws may occur at any time and could have a substantial impact upon each person's situation. Investors should consult a tax professional for tax advice specific to their situation.