Aretha Franklin and Prince got a lot right in their lives. They were celebrated singers — icons who each defined a genre — and they enjoy immortality through their contributions to music.
But despite all that’s laudable about their lives, there was one thing they both got devastatingly wrong: their legacy. N
either had a will. Prince never had kids, but Franklin is survived by four adult children, one of whom has special needs. As you know, a special-needs heir is particularly vulnerable and depends on a sound estate plan, and it’s important to remind clients why this document is critical for them if they have people who depend on them.
Clients might say these celebrities’ stories don’t apply to them because their estates aren’t worth tens of millions. This is the perfect opportunity to explain that it’s not the amount of money that necessitates an estate plan. Their legacy is how they’re remembered, and part of that is being thoughtful about how their money and personal effects are distributed.
Helping people create their legacy is something I take very seriously. It’s the reason I cofounded LegacyShield, an online legacy planning platform: to encourage people to create a plan for their lives.
When you’re explaining the difference between wills and trusts — and how each serves an important purpose — here are a five points to mention about each.
Why Create a Will?
- A will is the only document in which you can name a guardian(s) for your children, which might be necessary if you have young children or a special-needs child who requires care.
- It’s an official document that provides a detailed account of what assets you have — personal and financial — and what you want to do with those assets.
- A will prevents your estate from becoming public record.
- It stops relatives you barely know from appearing to stake a claim on your assets.
- Perhaps most importantly, it tells the court your wishes.
Prince’s estate sat for some time in a Minnesota court before his sister, Tyka Nelson, and five half-siblings were eventually named his heirs.
That’s far from ideal, because prolonged court time means more fees that leech money from the client’s estate and leave the client’s loved ones with less. It also means additional pain and suffering for the client’s heirs, as they battle each other or simply try to figure out what’s fair.
So, the less time a client’s estate sits in purgatory, the better.
Why Use a Trust in Estate Planning?
- A living trust allows you to avoid probate court, which takes a lot of time, can be expensive, and makes what most people consider private affairs public.
- You need a living trust in case you become incapacitated.
- You can include specific instructions for trust management and disbursement if you die, which is important if you want to delay an inheritance to a milestone birthday.
- A trust is important if you have minor children or a child who’s disabled because it can be used as a tool for financial management to take care of those who aren’t able to make those decisions.
- You might even consider a special-needs trust because it offers an additional benefit: it doesn’t interfere with any government benefits the recipient might be receiving.
The most important piece of advice you can offer clients is: Don’t wait.
Prince and Aretha Franklin waited too long and died without making their wishes known. Use their stories as a way to have the conversation with your clients and encourage them not to make the same estate-planning mistakes.
Please encourage your clients to work with you as well, as their entire financial teams, when creating their estate plans.
— Read 3 Lessons Prince Left Agents and Advisors, on ThinkAdvisor.
Michael Babikian is the chief executive officer of LegacyShield, a financial services exchange built around a family information management system.