The Cost of Estate Planning Failures

Prince (57) was a singer-songwriter known for hits like “Little Red Corvette,” “Purple Rain,” and “When Doves Cry.” He died in April 2016 after an accidental fentanyl overdose. At the time of his death, there were no legal instructions for his $300 million estate. Based on Minnesota law, his estate was left to his child and then to any surviving siblings. This situation was quite complex since Prince’s estate consisted of copyrights and recordings as opposed to dollars and cents.

Kobe Bryant (41) was a basketball player known for playing for the Los Angeles Lakers for twenty seasons, winning five championships in the process. He, along with his 13-year-old daughter and eight passengers, died in a helicopter crash in January 2020. At the time of his death, it is estimated that Kobe had earned over $500 million throughout his career. As his surviving spouse, Vanessa Bryant will receive at least half of the money that came in since their marriage in 2001. As Wealth Advisor points out, a fair amount of forty-year-olds do not think to update their beneficiaries when they get married. As a result, there is a chance that Kobe’s parents may be listed as the heirs of record as opposed to his wife. When this occurs, money bypasses the surviving spouse and moves back up a generation.

Chadwick Boseman (43) was an actor known for his roles in Black Panther, 42, and Ma Rainey’s Black Bottom. After a four-year battle with colon cancer, Chadwick died in August 2020. For reasons that have remained private, he died without a will. As a California resident, his surviving spouse, Taylor Simone Ledward, would be his legal heir under the state’s intestacy law. The future of part of his estate will require court intervention during probate – the legal process of administering someone’s estate after death. 

Importance of Estate Planning

Whether the individual is famous or not, whether the death is sudden or foreseeable – people tend to procrastinate getting their estate in order and preparing their will. While death is inevitable for everyone, Steve Parrish, co-director of the Center for Retirement Income at The American College of Financial Services, laments that, “…no wants to admit their own mortality.” It is estimated that 62% of people residing in the United States do not have a will.       

People mistakenly believe they do not have enough assets to justify having a will or engaging in estate planning. Shann Chaudry, an estate-planning attorney, stresses that, “It doesn’t matter how many assets you have, an estate plan will ensure that your medical and financial decisions can be made by someone that you trust.” A last will and testament is a document that identifies to whom an individual gives their assets after death while a durable power of attorney is an individual who is legally empowered to make financial decisions on behalf of a sick spouse, family member, or friend. Michael Arden, president of Arden Trust, warns that “A lot of folks say, ‘I don’t have an estate plan,” but you do – the state has one for you.” These decisions, which will impact the financial and emotional future of one’s loved ones, are too important to be made by a total stranger. 

Importance of Life Insurance

It can be harrowing to think about the lingering costs of an estate after one’s death. Whether the death is foreseeable or not, life insurance in an irrevocable insurance trust (ILIT) can be instrumental in this process. This trust is designed to receive the proceeds of the death benefit without inflating the value of the insured’s estate. The death benefit can be utilized to repay debts, cover funeral expenses, and finance administrative costs, such as lawyers, accountants, and appraisal fees.

Rather than leave your future up to the state, take power into your own hands and take steps to secure your own will and estate. Let this article be the catalyst to get your estate in order!

Talk to our Principal Ron Bland to further discuss life insurance options. You can reach us at Ron@AEISAdvisors.com or 650.348.6234 x12. The team, made up of expert advisors, can also assist you in acquiring a robust and comprehensive benefits package.

Disclaimer: Any information related to compliance or other subject matters in this blog is intended to be informational and does not constitute legal advice regarding any specific situation. The content of this blog is based on the most up-to-date information that was available on the date it was published and could be subject to change. Should you require further assistance or legal advice, please consult a licensed attorney.