A few weeks into the new year, how many of your New Year’s resolutions have already fallen by the wayside? Exercise more. Eat less. Spend more quality time with family.
Well it’s not too late to tackle a very important resolution that up to two-thirds of adults in our country ignore — estate planning. That’s right, it’s the topic no one likes to think about, but everyone knows they should take care of … wills, trusts, powers of attorney, and more.
It doesn’t have to be intimidating! In fact, celebrity stories are a great way to break the ice to remind everyone of what they need to do.
So, with the help of some recent stories in the news, here are Trial & Heirs: New Years Estate Planning Resolutions for 2012. (We just gave an interview discussing some of these stories, which you can watch here).
The Estate Of Etta James
1. Plan Now and Don’t Procrastinate.
R&B legend Etta James was 72 when she passed away last week, after suffering from leukemia, dementia and other problems. Canadian Olympic skier Sarah Burke was only 29 when she died recently from injuries in a freak skiing accident, despite being one of the top athletes in the world. It’s a sad reality that accidents and serious medical conditions can affect any of us, at any time. We all need to be prepared.
While it’s easy to procrastinate doing a will, trust or other legal document, the consequences can be devastating. Take author Stieg Larsson, whose Girl With The Dragon Tattoo book and sequels achieved global success. The recent Hollywood movie adaptation has grossed over $140 million worldwide since it was released a month ago.
Larsson died without even a will. This sparked a huge lawsuit between his live-in girlfriend of 32 years and his brother and father, whom the girlfriend claims were not close with Larsson. The family members inherited his now-vast estate (conservatively estimated at $40 million) and sued because the girlfriend has possession of a laptop with an unpublished fourth manuscript. You can read about the Larsson Estate lawsuit here, which remains unresolved.
Larsson died unexpectedly at the age of 50 from a heart attack. His procrastination with his estate planning means he did not get to decide whether his girlfriend or his family members inherited his estate.
Don’t make the same mistake with your estate. You’ve worked hard your whole life; shouldn’t you decide who receives what, when, and how? Don’t procrastinate and let the laws in the state you live in determine who receives your property after you pass away.
2. Appoint Medical and Financial Decision-Makers.
Etta James’ final year of life was marred by controversy, between her husband of 42 years and her two adult sons from prior relationships. Her 2008 power of attorney gave legal authority to one of her sons, but her husband claimed it was signed after James already had dementia and was not competent. They fought in court over who would make her financial and medical decisions, and even how much money her husband would be allowed to have to pay for her care. You can read our Etta James lawsuit article here.
Luckily, the family reached a resolution a few weeks ago, around the time James’ illness was declared terminal. The Etta James estate settlement allowed her husband to make her medical and financial decisions as her conservator (called guardian in some states), but only permitted him to control $350,000 for her medical care.
Britney Spears is also under conservatorship, despite being much younger than James … or indeed, the large majority of adults who have conservators or guardians. Just recently, her father announced that he was going to ask the court to terminate the medical/non-financial part of her conservatorship so she could get married without restriction. Reportedly, he will hang onto the financial control. We have written before that the reasons for this are suspect, and may be for the purpose of insulating Spears from lawsuits.
Whether you are 30, like Spears, or in your 70′s, like James (or any other age for that matter), it’s critical to have power of attorney and living will documents in place, in case you should suffer a serious medical condition or accident. Without these, your family members — even your spouse — would have no right to make your medical or financial decisions unless they go to court and seek guardianship and/or conservatorship.
As the Etta James case illustrates, this can be a breeding ground for a family fight. Even when there isn’t family fighting, such as in Britney Spears’ case, these court proceedings are still intrusive, public, expensive and very cumbersome.
It’s far better to keep yourself and your family out of court by having the proper medical and financial decision-makers appointed in your legal documents. That way you’ll be protected, in case something should happen to you that renders you unable to make your own decisions.
3. Update your Will, Trust and Other Legal Documents.
Think you can stop reading because you already have will, trust and power of attorney documents in place? Not so fast. When was the last time you updated your documents? Have you had a life event like a divorce, the birth of a new child, a new business, or a move between states since then?
If so, or if you haven’t had your documents reviewed in the last three to five years, you still have work to do. Heidi Klum and Seal, take notice! When couples — especially those with children — file for divorce, it’s important to visit your attorney or financial planner and start the process of updating your legal documents. Would you want your ex-spouse to make your medical decisions or receive your life insurance? That often happens when documents aren’t updated.
Author Michael Crichton’s estate highlights this point. He died at the age of 66 from throat cancer, when his wife was six months pregnant. He never updated his will to include the new child, and in fact, his will had language excluding any new children. His adult daughter from a prior marriage and his wife fought in court over whether the baby should be allowed to inherit. You can read about the Crichton Estate case here.
Ultimately, the Judge ruled in favor of the wife, and the baby was allowed a share of the inheritance. But it never should have gone that far.
4. Get Your Affairs Organized.
This is a critical step in the estate planning process which many people overlook. What good are properly-drafted wills, trusts, and power-of-attorney documents if no one can find them? Let your loved ones know where they are stored. And we highly recommend using an estate planning organizer to list out legal and financial documents and assets, so your family members know right where to go if tragedy should strike.
Look at the recent Italian cruise ship disaster. There were reports of passengers stuck on board, calling loved ones to make sure the kids where going to be taken care of and telling people where to find their wills and other legal documents. Here’s an example. But, where the will is located is just the start. What about your life insurance policies, bank accounts, deed to your house, and all that other important information stored in your head that no one else knows?
Don’t wait for a personal tragedy; get prepared now. Once you organize your affairs and let your trusted loved ones know where your important legal and financial information is located, you can rest easier at night and not worry about protecting your family if something should befall you.
5. Talk With Your Family.
The proper estate planning is an act of love for family members, because family members pay the price when it’s not done or is done improperly. So talking to your loved ones is an important part of the process. It’s not a matter of telling people what they will receive — that can certainly be kept private. But it’s very important to let loved ones know you’ve done your planning, where your documents and information are located, and who the professionals are that you work with.
You should also talk to your family members to see if they’ve done their own estate planning. Not sure how to bring up the conversation? Celebrity stories are a great way to break the ice and get the dialogue started. Today we’ve shared just a few stories to get you started; you can visit TrialandHeirs.com for many more.
By Danielle and Andy Mayoras, co-authors of Trial & Heirs: Famous Fortune Fights!, husband-and-wife legacy expert attorneys, and hosts of the national television special, Trial & Heirs: Protect Your Family Fortune! For the latest celebrity and high-profile cases, with tips to protect yourself, your loved ones, and your clients, click here to subscribe to The Trial & Heirs Update. You can “like” them on Facebook and follow them on Twitter.