Prince's $250 Million Mistake
It would be hard to imagine many reading this column today are not aware of the untimely death of the musical artist, Prince. The news was still fresh when speculations began to swirl about Prince's estate and what was to become of it.
With songs like "Purple Rain" and "Little Red Corvette," Prince wrote the soundtrack of a generation. However, Prince apparently had no will, and his failure to write one could spell trouble for his estimated $250 million fortune.
Last week, people around the world mourned the death of this gifted singer and songwriter, and many were surprised to hear that Prince didn't have a will or an estate plan of any kind in place. Even though he was a notoriously hands-on negotiator who meticulously controlled the intellectual property rights of his song collection, this unfortunate lack of planning has left uncertainty for his heirs.
The future inheritance process could cost tens of millions of dollars in legal fees, and state and federal estate taxes. And Prince is not the first famous person who has left this world without a plan.
Not yet famous with a quarter billion dollar estate to leave loved ones? It's still important to have a will and keep it up-to-date based on changing personal and financial situations. Here are a few tips to make sure you have an effective will:
First, seek out a pro. Engage the assistance of a CPA and an attorney to draft a will and do estate planning. An attorney will be able to help you navigate the estate planning documents and a CPA is often best positioned to help with more complicated estate planning.
Having a professional prepare your plan eliminates any confusion if you have minor children, own significant assets or want to control the management and distribution of your property. Additionally, you will know that all your intentions are clearly communicated and recorded.
Second, periodically review your documents. From year to year, relationships change as do financial situations. Regularly updating helps to ensure your closest relationships are accurately reflected in your plan.
Also, make sure you periodically evaluate who your executor will be. Being an executor is a thankless job, but it is an extremely important one with many responsibilities. You'll want to choose someone who is ready to take on tasks, such as taking care of any debts and distributing your property and money properly.
Additionally, make the time! For some people, the idea of taking heed of their finances is so daunting they put it off. However, it is important to make time to do so to ensure that your wealth is distributed how you wish in the event of misfortune.
It is also one of the greatest gifts you can give your loved ones during an extremely difficult time, eliminating a huge burden they would otherwise have on them.
Now is the time to work with a professional to either write a will or review your financial affairs, making sure your wills and estate plans are up-to-date. Failure to do so could have devastating financial consequences in the event of an unexpected death.
