When music icon Prince passed away suddenly, much of the world felt a deep sense of mourning over the talent we lost. Most of the world, that is, except the 700 people that are now claiming to be heirs, entitled to some portion of his great fortune. Prince died intestate–without any written or known plans for how he wanted his vast estate divvied up. It may take years and many pricey legal battles for the courts to sort through each of these claims to decide who may be entitled to receive from Prince’s estate. While your fortune may or may not be nearly as large as Prince’s, it is important to do estate planning– create a plan for what will happen upon your death–well in advance of your final days. Putting thought into your estate plan today will save your loved ones time and money in the long run, because we all know, “Life is just a party, and parties weren’t meant to last.”
The first step in estate planning is figuring out what you have of value–what are your assets. Your assets may include checking and savings accounts, investments, businesses, real estate, and even jewelry or fine china. Once you know what you have, you will need to establish their values. There are many ways to figure out what something is worth; sometimes expert appraisals are necessary. Your attorney can help you connect with resources like the Kelly Blue Book and knowledgeable appraisers when necessary. Once you know what you have and how much it is worth, you will need to figure out the best way to protect your assets. Asset protection is not just about putting things in their proper places. Yes, money should be stored in banks (not under the mattress!) and jewelry should be stored in a safe. But there is much more required when it comes to protecting your assets. The goal of asset protection is to figure out the best way to preserve the value of your assets in order to pass them down to your heirs after you pass away. To do so, you must understand and stay in compliance with complex federal and state tax laws. As you can imagine, this is no easy task! After a lifetime of hard work, that last thing you’d want to see happen is losing all you have to show for it due to lack of asset protection. Attorneys can help you both understand the laws and strategically care for your assets through a variety of methods including trusts and other advantageous arrangements.
One of the biggest issues facing the judges dealing with Prince’s asset distribution is he didn’t even take the basic step of documenting who he would like to receive shares of his assets. Unlike Oprah’s famous “You get a car! You get a car! You get a car!” days, the estate court system cannot just give something away to every person who thinks they are entitled. Designating beneficiaries-the people who will receive a share of your estate upon your death–ensures that your assets are distributed to the right people. If you don’t specify beneficiaries, your wealth may not end up in the right hands. Beneficiaries should be named on all life insurance policies, retirement resources, pensions, deeds, checking and savings accounts, and investment portfolios. Beneficiary designations should be reviewed regularly– remember the goal is to get all of your assets to all of the right people, and sometimes due to life circumstances a person who was ‘right’ before, may be the wrong choice now.
Attorneys can help you establish beneficiaries for all of your assets, and review your choices to see if there may be any issues with your plan.
Last Will & Testament
Now you know what you need to do to prepare your estate– protect your assets and assign beneficiaries–but how do you actually go about making sure your assets end up where you want them to? A Last Will & Testament, more commonly called a Will, is the document that explains what you want done with all of your assets following your passing. Without a valid Will, the court system will decide who to give which of your assets, and even who will care for your children, without any credence given to your personal relationships or feelings.
In Maryland, a Will must be in writing, signed by the testator (the person, aged 18 or older, whose assets are discussed in the Will) and signed by two credible witnesses in the presence of the testator. A Will is probably the single most important document you can create during your lifetime. In your Will, you can appoint a person you know and trust to oversee the distribution of assets. You can name charities that you wish to donate money or goods to after you die. If you have minor children, your Will is the place that you can name their legal guardians and who will handle their finances (if different than their guardians). You can make changes to your Will any time there is a significant change in your circumstances–from winning the lottery to going through a divorce. Changes to Wills must be done in writing, in a new document called a codicil, which follows the same procedures of a Will as far as witnesses, etc. Each state has different laws regarding Wills created in other states. Maryland law recognizes the validity of Wills created out of state. However, Wills created in Maryland may not be valid in other states–so it is important to review the validity of your Will if you move out of state.
Your Will can be filed in your county’s Circuit courthouse for a one-time $5.00 fee. The Register of Wills will keep your Will safe and private. Your Will can only be released to you or your named personal representatives for review during your lifetime, and your personal representative or the probate (estate) court upon your death. Make sure your personal representative knows where your Will is stored for easy access during what may be a very emotional time period.
Sometimes it feels morbid to plan for your death while you are still very much alive. Prince himself said it best, “We could all die any day…I’d rather dance my life away.” Unfortunately, if you spend all of your days dancing, your assets may fall into the wrong hands the moment your music goes silent. Take the time today to protect your assets and plan for their distribution after your death– your loved ones will thank you for a lifetime to come.
Attorneys at Ferrante & Dill, LLC understand the sensitive and emotional nature of estate planning. Contact us today at 410.535.6100 so we may walk you through this important process.