How To Wreck Your Estate

One of the best things about celebrities is that they live their lives so publicly that, hopefully, the rest of us can learn from their mistakes.  When it comes to famous people who mismanaged their considerable estates, regrettable stories abound: 

Guitarist Jimi Hendrix left no will and no instructions.  It took 34 years of court battles to come to some resolution, and, according to biographers, relatives closest to Hendrix during his lifetime didn’t get a dime.  Attorneys got plenty. 

Actor Heath Ledger failed to update his will after the birth of his daughter, Matilda.  His legal will left all of his assets to his parents and sisters.  Confusion and recriminations abounded until the family (much to their credit) decided to gift the entire estate to then two-year-old Matilda. 

James Gandolfini, the actor who played Tony Soprano, left behind a much criticized will that reportedly did not protect large portions of his hefty estate from probate and exposed his heirs to millions of dollars in tax liability.                  

You Too Can Easily Wreck Your Estate...and, in doing so, you may also compound grief issues and soil your legacy among family members and friends whom you hold closest to your heart.  Let us spell out some of the most common examples of bad advice that can cost you and your family so much. 

#1 “Don’t worry!  You’re too young to worry about a will.  You don’t own enough yet to protect.”

Death, injury and illness are not reserved just for the elderly.  There are vital reasons now to address your estate.  Dying without a will may subject your assets to a potentially very expensive and time-consuming probate process.  Your neglect also adds significant stress to the hearts of your loved ones, perhaps in a time of nearly unendurable grief. Your plan should also include documentation to designate who cares for your children in your absence, who cares for you if you are incapacitated, and the quality and limits of your own medical care in the final season of your life. 

#2 “Let someone sign a signature card at your bank so that, if anything happens, at least they can pay your bills.” 

Not a good idea.  Allowing someone else to “fill out a signature card” on a financial account immediately makes him or her a full co-owner of that asset. Not only do countless stories exist about “loved ones” abusing such privilege, but, if either one of you becomes embroiled in a lawsuit, bankruptcy or divorce, you and your “co-owner” are very much at risk.   

#3 “Don’t worry.  All of your money will go to the person listed in your will.” 

Not so fast!  Even if you have a will designating your intended heir, he or she may not get the money you have stashed in specific accounts.  If you own an insurance, brokerage or investment account which cites a beneficiary, that other document will trump the value of your will.  If, for example, you write out a will leaving your whole estate to your cat BUT your former wife is still listed as the beneficiary on your 401(k), your ex-wife will get the cash in that 401(k) account.  

#4 “You don’t need a planner. You can do it yourself with some help from an attorney.”

Many people approach estate planning in a piece-meal process, only addressing those issues which impress them as important at the time.  They consult an attorney only if (A) legal documents are required and (B) they can’t find a DIY (Do-It-Yourself) solution on the Internet.  Not good.  Estate planning should never be a patchwork process.  

The lapses or well-intended messes you leave behind may very possibly impact the quality of your final days and compound the tragedy of your departure.  Your estate plan may involve the entirety of your financial profile and, done well, absolutely maximizes your personal wealth for the duration of your life.  Only after your security is settled, should you plan then to maximize the amount of wealth that you pass on as a legacy to those whom you love the most.

Attorneys are often a vital part of this process but are not equipped in many financial matters.  You need a team led by a financial professional.  Don’t compromise the quality of your later years.  Don’t short-change the people you love.  Let’s meet and talk about your good intentions.  

Sources:  (1)  “Six Costly Estate-Planning Minefields, and How to Avoid Them.” Consumer Reports. 4/14/15.  (2)  Goldman, L. “10 Celebrities Who Made Terrible Mistakes Planning Their Estates.  Business Insider.  12/7/10.  (3)  Fabio, Michelle. “The Battle over the Jimi Hendrix Estate.”  12/1/09.  (4)  Davis, C. and Ambrose M., “Heath Ledger’s Daughter to Inherit Entire Estate.”  People Magazine.  9/29/08

Investment advice is offered by Horter Investment Management, LLC, a Registered Investment Adviser. Insurance and annuity products are sold separately through TWP Financial. Securities transactions for Horter Investment Management clients are placed through Pershing Advisor Solutions, Trust Company of America, Jefferson National Monument Advisor, Fidelity, Security Benefit Life, ED&F Man Capital Markets and Wells Fargo Bank, N.A.