Prince without a Plan

If you knew you weren't going to die for a long time, the last thing you'd ever worry about in the meantime is meeting with an attorney to draft an estate plan. It's the most commonly skipped part of the financial planning process, and, from my perspective, it seems that not a single person on this planet cares about estate planning...that is, of course, until they're the recipient of an untidy estate. Then it quickly becomes their passion. And they actively and aggressively spread their wealth of knowledge to anyone within earshot.

Celebrities are easy to highlight as prime examples of planning gone awry, and the latest real-world scenario comes from Prince. In an article by NPR (and another concise piece in the Iowa City Press-Citizen), they point out that Prince died with no plans in place. And, unfortunately, the real victim in this case is all of the non-profits in the twin cities that he supported during his life. Without estate plans that name charities as beneficiaries (and assuming none were named as beneficiaries of retirement accounts), the courts certainly will not distribute any of his wealth to them. 

So what does this mean for the average person: you or me? As discussed in the Press-Citizen article linked above, without proper wills or trusts, you cannot name a guardian for your children, the court system decides your beneficiaries for you, and the courts get to choose the executor for your estate. Proper planning, on the other hand, returns 100% of the control to you.

The added complexity of Prince's massive wealth certainly complicates things to the extreme, but even for small estates (think of elderly grandparents living on social security and pensions) it makes a difference.