You're likely wondering what this strange sounding word is and whether I am disparaging the talented artist.
Would never do it!
Intestate is the odd sounding legal term for dying without a will.
The sadness over Prince’s passing becomes greater considering how his family is going to lose out. There will be many news stories written about this in the future but let me cut to the chase. A probate judge will decide how Prince’s estate will be carved up, more than likely evenly, among all the musician’s relatives. There is a pretty strong likelihood that’s not what he would have wanted. But, because he didn’t draw up a simple will that gives the probate judge some guidance, there is no way to know. His is a classic case of a life lesson learned the hard way.
More: Meloni Money Section
For you, the lesson is whether you have a nice piece of heirloom jewelry you want to go to your sister or a home you want the kids to inherit, minimally you want and really need to have a legal will.
Now, many people put these kinds of decisions off for many reasons:
- They don’t want to face their mortality -- who does?
- They don’t think they have enough property to bother with or they think they need a lawyer to draw up a will.
- For many this might seem too expensive and don’t have the cash for it right now.
Well, here is the real deal:
Unless you own nothing or have no relatives, you NEED a will. What’s more, you don’t need an attorney to get one. There is a legally binding document called a holographic will. You can pull out a sheet of paper, write down all of your desires for who gets your property when you die, do this in front of two other people (adults) who sign the paper as witnesses and presto, you have a will. Put it away in a safe deposit box and you have checked off one of those important bucket list items.
Now, I want to be clear here: This is not the recommended method. But, it at least gets your thoughts recorded somewhere that relatives can have when you leave this earthly plane. You do not need a lawyer to draw up your last will and testament but it’s helpful and not nearly as expensive as you might think -- $500 should get you home. There are online options as well and we will link to some here.
The really expensive issue for Prince’s family is that he didn’t seek out the assistance of a trust attorney to construct one or a series of trusts. Because he did not, his roughly $300 million estate is going to get carved up significantly by the government and there won’t be a lot left for the heirs.
First of all, the probate process is quite expensive and will take years to complete. Probate is also a public process, so as the case goes to court, ALL of Prince’s personal financial details will be open for anyone to see. This may or may not end up a little embarrassing. So take roughly 10 percent off the top for probate expenses. Then there is the federal estate tax, which can exceed 50 percent.
Probate is a state court process and on top of the probate expenses Minnesota (as do most states) also has its own state estate tax. The family might see 40 percent of the estate if they are lucky. Again, this is a life lesson for us all.
If you have a good sized house, a pension or sizable 401k account it is probably in your best interest to have a trust. A trust acts as a separate “person” where you can either place assets before your death or leave assets to at your death, to avoid all of this taxation. Also, a trust is a legally binding document that seals your personal financial records and no one but you, your attorney, your trustee and your heirs know what is in there. There is no public examination of your situation. For this you will need an attorney and the bill will more than likely exceed $500; but you have two choices here, be penny wise and pound foolish, or not!
So, let’s make it a point to get a will this year for sure and seriously consider a trust, if not for you, for the ones you love.
Helpful resource: The Estate Planning Starter Kit for Newlyweds