By Rebecca Hinton
Taylor Porter; Tax and Estate Planning Attorney
It’s probably safe to say that very few people care to think about, and plan for, their deaths. But as Benjamin Franklin said, “in this world nothing can be said to be certain, except death and taxes.”
Cue the musical artist icon formerly known as “The Artist Formerly Known As Prince.” Three years ago in April 2016, Prince died from an accidental opioid overdose at his Paisley Park home outside of Minneapolis.
Prince’s death being tragic and unexpected; there was no will left behind, and Prince’s heirs – six siblings – have been unable over the last three years to retrieve any money from the estimated $200 million in estate value until all confusion is cleared between the bank, estate executor, and the IRS.
As previously reported in several media outlets, including Forbes, and most recently USA Today (many of the documents in the case are heavily redacted), there is an issue of the value of the estate, and whether it has increased or decreased from the time of Prince’s death. It is also not clear, according to the USA Today article, why the estate has not paid tax bills due to the state of Minnesota and the federal government. A will would likely have been helpful to reduce the tax bill to the federal government and the state of Minnesota that totaled 56% of the value of his estate. The heirs’ dissatisfaction with the estate administrators has grown, leading to their latest effort to gain more control over spending: So far, administrators have spent $45 million, including $10 million in legal fees, the heirs claim in documents.
So the lesson in the estate planning world from Prince’s Death: ‘For the sake of your family, get a will in place before it’s too late.’
Avoid Litigation Issues with a Last Will and Testament
You don’t have to be a millionaire to have a need for a Last Will and Testament. The issues presented in the aftermath of Prince’s death are issues that can arise when anyone passes away without undertaking adequate estate planning. Oftentimes in these battles, the litigation attorneys are the only ones who “win.” As estate planning attorneys, we work to help clients avoid these litigation trials since many of these battles and costs can be avoided with proper planning. Through proper planning, clients can avoid paying excessive legal fees, protect loved ones from battles amongst each other and creditors, and most importantly, maintain family relationships that can be strained through the course of litigation over pre- and post-death matters.
Basic Estate Planning Paperwork
When we work with clients on estate planning matters, we often prepare a Last Will and Testament, a Medical Power of Attorney, and a General Power of Attorney for each individual.
A Last Will and Testament dictates who can handle the transfer of the client’s assets after their death, as well as who will receive their assets upon death.
In addition to a Last Will and Testament, Medical and General Powers of Attorney can also help clients designate individuals who can make medical and financial decisions for them in the event that they cannot do so. Properly crafted Powers of Attorney can help individuals avoid costly, and often emotionally taxing, interdiction proceedings in the unfortunate event that an individual suddenly cannot make decisions or care for himself.
Establish a Trust for Your Children
Most people should have a Last Will and Testament in place. For families with minor children, a Last Will and Testament can provide who will manage funds for your surviving spouse and children in the event of an untimely death, and also provide for who will take care of your children in the event that both parents pass away.
Even as children attain the age of majority at a “young” 18 years of age, a Last Will and Testament can protect your children through their early adult years, or even later in life. This establishes a trust that can provide funds for your child’s living, education, and health related expenses until they reach an age (often past majority), where they are best able to manage their financial affairs on their own.
For married couples of all ages, a Last Will and Testament can provide more flexibility and freedom for a surviving spouse’s use of the family assets that are not automatically provided if an individual does not have a Last Will and Testament. For individuals whose children are grown and self-sufficient, a Last Will and Testament can still clearly dictate the wishes of the individual as to the handling of their assets and affairs, to avoid disputes among loved ones after their deaths.
Planning Documents, Succession Plans for Business Owners
For individuals who own closely-held businesses, it is also important for these individuals to consider proper planning for their businesses. This will ensure that these business assets remain available, and your family financially benefits from the business, upon and after your passing. Such planning can be undertaken in the form of a Buy-Sell Agreement, Operating Agreement, or Shareholder’s Agreement.
While the considerations at play in making these decisions can be difficult and trying, having these documents in place can provide peace of mind to a client. Proactively undertaking this type of planning can save clients tens of thousands of dollars in the long-run, protect family assets and legacies, both financially and personally, and be well-worth the time and expense on the front-end.
About Rebecca Hinton: Practicing law since 2006, Taylor Porter Special Counsel Rebecca Hinton represents individuals and businesses in the areas of federal, state and local taxation; tax controversies; estate planning; business matters; successions; and trusts. Rebecca is ranked by her peers among the Best Lawyers in America®. She is an adjunct professor at Louisiana State University Paul M. Hebert Law Center, and frequently presents at CLE and other seminars on the topics of federal estate and gift taxation, estate planning, and federal taxation. In her estate planning and administration practice, she assists clients with the preparation of their personal estate planning documents, ranging from traditional wills and powers of attorney to establishing large scale trusts, family limited liability companies, and long-term gifting plans to lessen Federal estate and gift tax exposure. She also supports clients in administering successions. Rebecca serves as secretary of the Estate & Business Planning Council of Baton Rouge, an interdisciplinary organization for professionals involved in estate planning.
This website is for general information purposes only. Information posted is not intended to be legal advice. For more information, please see our Disclaimer message.
8th Floor • 450 Laurel Street • Baton Rouge, LA 70801 • 225-387-3221