Don’t Let Your Clients Make the Same Mistake as Aretha Franklin and Prince

Why Create a Will?

1. 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.
2. 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.
3. A will prevents your estate from becoming public record.
4. It stops relatives you barely know from appearing to stake a claim on your assets.
5. 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?

1. 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.
2. You need a living trust in case you become incapacitated.
3. 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.
4. 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.
5. 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.