It will not take much to beat Prince in the estate planning game.
Actually, according to an article by Forbes, titled (appropriately) "Prince and Estate Planning: What We Can Learn from the Late Musician's Financial Picture," you would leave your loved ones in a better position than about 64% of the American population simply by drafting and executing an estate plan.
What fundamental documents do you need?
A good place to start are the six identified in the aforementioned article, to wit:
What do these forms accomplish?
When it comes to certain assets and accounts, such as your 401(k)s, IRAs, and life insurance policies, you need to designate the individuals you intend to inherit these assets upon your death.
These designations must be kept up to date for each account.
Because beneficiary designations take priority over the directives in your will.
POD and TOD Designation.
Payable on death (POD) and transfer on death (TOD) forms function similarly. They ensure that specific assets transfer immediately to your beneficiaries when you die.
How do they differ?
A payable on death (POD) form typically deals with money in your checking or savings accounts.
A transfer on death (TOD) form/deed is typically for brokerage accounts or even a deed to your home.
Durable Power of Attorney.
With this documents, you can designate an individual to make health care or financial decisions on your behalf if you become incapacitated or unable to make them for yourself.
Also called an Advance Health Care Directive, the living will outlines your wishes regarding medical treatment should you become unable to communicate them yourself.
This establishes how you want your probate eligible assets divided and names guardians for your minor children.
A Living Trust.
This document can serve similar functions to a will but also involves appointing a trustee to carry out specific wishes for your assets.
Why might you opt for a living trust?
Unlike a will, assets held in a trust are exempt from probate. A trust can help manage your assets and property while you are still alive, but incapacitated.
If you are serious about avoiding the same mistake Prince made, contact an experienced estate planning attorney.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Forbes (April 29, 2016) "Prince and Estate Planning: What We Can Learn From the Late Musician's Financial Picture"