The late musician Prince left behind a musical legacy that will be enjoyed for generations. What he did not leave behind was a will and that has cost his legitimate heirs a lot of money and months of uncertainty.
Thirty other individual claims, including those of strangers claiming to be his long-lost children, had to be adjudicated in a Minnesota court where Prince lived and died.
Who should have received his financial legacy, his properties, and even his little red Corvette?
What Prince might have wanted will never be known because he did not have a will. It was the courts who decided who got what.
It’s true, Prince had a very sizeable estate, but the size of the estate isn’t important: Prince should have had an estate plan including a will – and so should you.
A will designates how your estate – money, property, insurance proceeds and other investments – should be distributed. By clearly stating your wishes for how your legacy should be passed on, you will protect your family from uncertainty and reduce the administrative expenses incurred by your estate.
Living wills, advanced healthcare directives, and powers of attorney for personal care provide directions for your care in the event of catastrophic illness or disability, whereas a regular will only takes effect upon your passing.
An executor (sometimes called a personal representative or liquidator in Québec) is the person or persons named in your will to settle your estate according to your documented wishes.
Liquid assets should be set aside to pay for taxes, debts, the costs of settling your estate, and/or other obligations.
Your beneficiaries should be clearly stated for all your registered investments and insurance policies. In many cases, it will be preferable to designate your estate as beneficiary so that these proceeds are administered according to the terms of your will.
Financial assets should be comprehensively listed — your bank accounts and locations, insurance policies and amounts, investment accounts, and other financial information –and be sure your executor and/or survivors know where to find this document.
An estate plan becomes even more essential if you own a business, are divorced or part of a blended family, have disabled dependants, or are responsible for the care of elderly or minor relatives.
You should revise your estate plan following any major life event such as a marriage or divorce, birth of a child or grandchild, or death of a spouse.
As Prince’s legitimate heirs unfortunately discovered, estate planning now avoids difficulties and costs later.
To do it properly, you’ll need a lawyer and perhaps an accountant, along with your professional advisor who can harmonize your estate plan with your overall financial plan and keep everybody in tune with your wishes for your legacy.
Jeff Somers, BA, RRC, CFP works at Investors Group in Charlottetown. This column, written and published by Investors Group Financial Services Inc. and Investors Group Securities Inc. presents general information only and is not a solicitation to buy or sell any investments. Contact your own adviser for specific advice about your circumstances.