You Better Think… About Your Financial Legacy

Aretha Franklin, the Queen of Soul, passed away in 2018, leaving behind a world-renowned musical legacy that included over 75 million records sold, 18 Grammy Awards and she was the first woman inducted into the Rock and Roll Hall of Fame. Unfortunately, the financial legacy she left behind was a different story—upon her passing, her children discovered multiple wills with conflicting provisions. Since they were unable to reach an agreement regarding her estate plans, a jury determined the outcome after nearly five years of public litigation.

Aretha Franklin was not the first—nor will she be the last—celebrity to pass away without a clear estate plan for her loved ones. There are dozens of examples of how poor estate planning leads to costly and time-consuming outcomes. Some celebrities, such as Prince, John Denver, and Sonny Bono, may have felt they were too young to worry about financial and estate planning. When these celebrities passed unexpectedly without estate plans, their loved ones had to deal with the emotional loss as well as lengthy legal battles.

Meanwhile, others, like Pablo Picasso and Stan Lee, ignored their mortality until it was too late; even though they were in their 90s, neither artist left a will, trust or estate plan. Their loved ones also had to deal with costly, public legal battles on top of grieving their loss.

While you may not think you have anything in common with the rich and famous, the reality is, if you do not have an estate plan, your loved ones could be left dealing with time-consuming and costly legal issues, too.

What happens if you don’t leave an estate plan?

When someone dies without an estate plan, their assets are distributed under their state’s intestacy laws. If you are a resident in Wisconsin when you pass away, the state has already created a one-size-fits-all plan that your family will have to follow. The best way to avoid this plan is to ensure you have a current will or trust and your loved ones know where to find these documents. Attorneys and financial planners can assist you in keeping track of your will and/or trust to ensure they are available when your family needs them the most.

Failing to plan can result in:

• Delays in distributing money or property
• Family members fighting over who should receive what
• Lengthy and expensive court proceedings in which perfect strangers make the decisions for your family and loved ones
• Outcomes very different from what you may have preferred

How can you avoid problems?

Having the right estate plan is essential for anyone with dependents or specific wishes for their money or property. When Soprano’s star James Gandolfini suddenly passed away at age 51, he left behind his wife, two children and an estate worth an estimated $70 million. Although he left a will detailing his wishes, his estate plan did not protect his heirs from exorbitant state and federal taxes. Prior to distributing these funds, the government took over 50% of the estate and the will was made public as part of the probate proceedings. Proper estate planning could have helped reduce or could have helped his heirs completely avoid estate taxes and it could have prevented the public from learning about his finances and his friends’ and family members’ inheritances.

Having a comprehensive plan means that:

• Your money and property will be efficiently distributed
• It is clear who your heirs are and what they will inherit. This diminishes the likelihood of disputes regarding who should receive what
• Your heirs will avoid court proceedings because your estate plan contains all the decisions for your family and loved ones
• The outcomes will be exactly as you planned

Where do I even get started?

There are many things you can do on your own prior to contacting your financial planner or an attorney. Consider starting by setting your goals and the outcomes you want and then working backwards to determine what you need to do to get there. When you do seek assistance from a financial planner or attorney, your “why” will already be clear and the “what” and “how” can be readily determined.

To get started, you need to get organized. You can start by:

• Determining your goals for estate planning by considering who or what you want to provide for after you pass
• Considering your options for who will handle the estate after you pass. While family members might be convenient, a lack of legal knowledge coupled with grief and sadness may lead to more rather than less issues
• Inventorying your assets and your debts. Although a fancy spreadsheet is nice, a handwritten list is just as effective
• Keeping all your estate planning materials and up-to-date documents in a safe, accessible location and reviewing them on a regular basis to ensure that they continue to meet your goals

Your Financial Legacy

The stories of Aretha Franklin, James Galdolfini, and other celebrities are reminders that wealth and success do not protect against poor planning. While their personal legacies live on, so do their financial legacies that resulted in costly public battles and unnecessary emotional upheaval for their loved ones. Learn from their mistakes and do not let a court decide your legacy. A financial advisor at Johson Financial Group can help you get organized to ensure your wishes become their reality.