According to Rocket Lawyer, 64% of Americans don’t have a will. There is a common misconception that if you don’t have an estate tax problem you don’t need an estate plan – or a will. The truth is that this couldn’t be further from the truth.
First, it could mean a lot of unnecessary time and money spent in court. Probate is already a costly and timely process. Most estates WITH a will take more than a year to probate. Estates without a will…????? American business tycoon Howard Hughes died in 1976 without a will. His estate was first divided among his relatives, but the story doesn’t end there. By 2009, over 1,000 people were heirs of his estate. There was also a 3 decade battle over Jimi Hendrix intestate estate. Even Michael Jackson - who had an estate plan, but never finished funding it - left his family fighting in probate court. And costly? Connecticut has just been named the most expensive places to die with several estate probates costing over $100,000 last year and a couple over $1 million! The good news is Texas has always been a friendly place to die, but this is changing. Just imagine if the courts, in addition to the normal probate cost, literally has to prepare the estate (create a will, virtually), name a representative for the estate, and distribute the estate. This is far from an insignificant amount of time or expense when 64% of Americans don’t have a will.
But maybe even more important than the cost or time involved is the fact that you actually do have a will even when you don’t have a will. It is called “state intestate laws.” We live in Texas, so let’s just pick on Texas. A major misconception is that your estate will go to your spouse if you die. This isn’t always true. Imagine your spouse was left with only ½ of your estate. Would he or she be okay? This could actually happen. Factors affecting that determination include titling of property, who had which children, are there living parents, the actual titling on property… And Texas certainly isn’t the only that may have unfavorable intestate laws: Abraham Lincoln’s Illinois estate was a victim of this. His estate was divided among his wife and two children. Martin Luther King Jr.’s estate was also a victim of his state’s (Georgia) will. Feuds went on for decades regarding his Nobel Peace Prize and his bible.
And of course, there could be the tax problem, which could cost 40% or more in some cases! The musician Prince may have cost his $300 million dollar estate at least $168 million in taxes! 56% is bad, but nothing comparable to the 73% in tax and costs of Elvis Presley’s $10 million dollar estate.
There is only one thing that could be worse than not having an estate plan—not updating the one you have. I could tell you countless stories we have heard of…. ex-wives inheriting money and leaving a new widow empty handed or court appointed representatives who use assets for themselves. Actor Heath Ledger never updated his 2003 will which left everything to his parents and sisters - and actually disinherited his daughter.
“Thinking too long about doing something is often the reason it never gets done.”-Anonymous.
The bottom line is to just do a little – or a lot of - estate planning now and stay on top of it by reviewing it on a fairly regular basis.