Aretha Franklin, known as the Queen of Soul, left behind a musical legacy and an important lesson in estate planning. Even after five years of her passing in 2018 due to pancreatic cancer, her children are still settling matters regarding her estate, estimated to be worth $10 million. The reason for the delay was that Franklin died without ever formally executing a last Will and Testament. Instead, she left behind two handwritten Wills, neither of which had been properly witnessed. One Will was discovered in a locked drawer and was written in 2010, while the other was found in a notebook under her sofa cushion and dated 2014. Both Wills included a different disposition of her home, leading to a legal battle between her sons to determine which was valid. Eventually, the most recently dated Will prevailed.
The lesson learned is to do your heirs a tremendous favor by having a Will properly drawn and executed. Shockingly, it is estimated that two-thirds of adults in America do not have a Will. This may be due to various reasons, such as not wanting to think about death, indecision on how to divide assets, or procrastination due to costs or inconvenience. However, it is essential to have a Will, and the process does not have to be overly complicated. Here are the basics of a good estate plan:
- Will: Your Will is a document that outlines who will receive each of your belongings after you pass away. If your children are under 18 years old, they cannot legally inherit your possessions. Therefore, it is essential to designate an adult or trustee to hold and manage your assets for their benefit. Moreover, your Will specifies who will care for your children until they are legal adults. If you do not have a Will, your assets will be distributed according to state law, and the court will determine who will take care of your children.
- General and durable power of attorney: This relatively simple legal document allows you to appoint someone to manage your financial affairs in case of an accident or illness that renders you incompetent. Suppose you become incapacitated without a power of attorney. In that case, someone else must hire an attorney, go to court, and have the court appoint an attorney-in-fact which can be both time-consuming and expensive.
- Living Will. In most states, this downloadable document allows you to indicate your end-of-life wishes regarding artificial life support. It should also include a power of appointment for healthcare decisions whereby you appoint someone to represent you to the medical staff. Without a Living Will, medical staff will follow hospital guidelines that may not align with your wishes. To download your state’s Living Will form, visit the Resource Center at WelchGroup.com, click ‘Links,’ then click ‘Living Wills- State by State.’ It is essential to ensure that this document is properly witnessed.
If you haven’t written a Will by hand, who should help you? I highly suggest hiring a local attorney familiar with your state’s inheritance laws. These laws differ significantly between states, and it is easy to make mistakes. For online help, a good place to start your search is LegalZoom.com. They provide state-specific estate planning for a modest fee.
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Stewart H. Welch, III, CFP®, AEP, is the founder of THE WELCH GROUP, LLC, which specializes in providing fee-only investment management and financial advice to families throughout the United States. He is the author or co-author of six books, including 50 Rules of Success; J.K. Lasser’s New Rules for Estate, Retirement and Tax Planning- 6th Edition (John Wiley & Sons, Inc.); THINK Like a Self-Made Millionaire; and 100 Tips for Creating a Champagne Retirement on a Shoestring Budget. For more information, visit The Welch Group. Consult your financial advisor before acting on comments in this article.
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