It’s shocking how many people pass away with no estate plan and no will. Obviously, everyone will pass away at some time. We all know it. Anyone with assets knows it’s coming and they know that an estate plan can make it go smoothly. But they just don’t do it.
Take, for example, the singer Aretha Franklin. She was an icon. She passed away last year, and it turned out that she didn’t even have a will. If you thought that only those without much in the way of assets would skip this important step, think again. Many of the world’s rich and famous make the same mistake.
There are a lot of problems with not drafting a will or creating a more complex estate plan. You may pay too much in taxes. Assets may get lost or overlooked. Your heirs have to do a lot of paperwork and navigate the system on their own. The list goes on.
One of the biggest issues, though, is that it causes confusion regarding what you actually would have wanted. If you have multiple children, they may all have a different idea of what that looks like. When they can’t agree, it leads to disputes that sometimes land in court. Your children whittle away the money they have, pitted against each other in a legal battle that you could have prevented.
It can’t always be fair
You may assume that your children will agree on what is fair. When it comes to money, they might. Say you have $900,000 and three children. The clear split gives each child $300,000. It’s hard for any one of them to argue that they deserve any more than that, so dividing it up seems simple.
But it can’t always be fair. What about the classic car in your garage that one child loves and the other two want to sell? What about your vacation property, which two children want to keep in the family and use on their own vacations, but which presents an unaffordable tax burden to the third child? What about the artwork and mementos in your home, which are unique, one-of-a-kind items that can really only go to one child?
Sometimes, there is just no way to divide things up so that everyone is happy and the division is equal. That’s when disputes begin to brew. The kids do not know what you wanted, so they all argue for what they want, and the court has to sort the whole thing out.
Drafting your plan
If you haven’t done it yet, the easiest way to avoid this outcome is by drafting an estate plan. Take the time to look into all of your options.