Who gets the Little Red Corvette: The Vital Importance of Estate Planning

Hartman-Ben-OPT

By Ben Hartman

Special to Business in Savannah

The sudden death of music icon Prince shocked and saddened fans around the world. Almost equally as shocking, it appears that Prince died without leaving a will or any other estate planning document in place. This creates an uncertain future for his estate, estimated to be between $150 million and $500 million, along with the possibility of protracted and potentially expensive legal wrangling. Even without rock-star level assets, anyone who has not yet created a will should use this news as a wake-up call.

A will is the most important tool for planning one’s estate and the only legal course of action for controlling the distribution of one’s assets after death. In the event that an individual passes without a will — known as dying intestate — the state of residence implements “intestate succession.” This plan represents a fairly simple, equitable distribution of assets, but is intended only to measure people’s shares according to how closely they are related to the deceased.

According to intestate succession here in Georgia, an individual’s children, if he or she has any, will each get an equal share of assets, regardless of their age, needs, financial situation or other considerations. The spouse of the decedent will generally get a similar share as well. If an individual is not married, has no children, and survived his or her parents (as in the case of Prince), assets are diverted to siblings in equal shares.

This legal course does nothing to provide for beloved family and friends who aren’t immediate relatives, support important charitable causes or appropriately disseminate heirlooms.

Dying intestate also means one cannot control who administers the estate. A court may appoint an administrator, but there will be no way of ensuring that the person is competent or that he or she understands the particular desires of the deceased. It is important to identify an executor and make sure that he or she (and possibly others) has a copy of the will and/or knows where the will is stored.

The estate of a person who died intestate will be distributed without concern for a beneficiary’s circumstances in life. This eliminates one of the popular goals of estate planning: encouraging young heirs to finish college, start a career or undertake some other life goal before receiving their share of the individual’s estate.

Intestacy also prevents the decedent from making special provisions for the handling of specific assets. In Prince’s case, the library of songs he leaves behind will generate millions — possibly hundreds of millions — of dollars per year, but if no will is located, he will have no say in where those profits go or how that library of songs is managed. If a decedent has assets such as art or a small business, they will require special handling carefully outlined in advance.

Particularly for sizeable estates, some planning can help minimize estate taxes. Currently the federal estate tax runs around 40 percent for large estates, but the creation of trusts and other vehicles can help ease that tax burden immensely.

Perhaps most importantly, dying intestate means one cannot specify who will be a guardian for his or her minor children. Young children may be assigned a guardian by the court, without regard to any verbal instructions the deceased parents may have given to family or friends. This lack of direction can create great friction within a family.

It also bears noting that many of the points above mention the involvement of a court. Probate court, like all litigation, is costly, and dying intestate may mean that the decedent’s estate is partly consumed by easily avoidable legal fees. A well-drafted will can dramatically reduce court oversight and court fees.

Given its importance, a will can never be drafted too early. Particularly if one has children or a business, it is crucial to plan for the unforeseen. Putting solid estate planning in place does not need to be time-consuming or costly. Just as importantly, it will save heirs a tremendous amount of difficulty and expense and avoid the possibility of family conflict. An estate plan is a gift to loved ones in every possible way.