In our society, not enough pressure is put on young people to plan ahead. We think of estate planning as something only the wealthy and the elderly take part in, but in reality, many of us realize the need to plan ahead when it is too late. Wills don’t only work to serve the financial aspect of the future; they can also include Medical Directives and Power of Attorney options as well. Would you want to be on life support if something were to happen? Dialysis? Would you want to have a Do Not Resuscitate order?
Estate Planning is Necessary
Many young people who are starting out their lives fail to recognize that even though they may not be swimming in money just yet, these are the other things that need to be accounted for. One reason young people do not find estate planning necessary is that they believe their family will receive their estate anyway. It is true that they will inherit your estate, but the question is concerns when they will receive it. Without an estate plan, your estate will end up in court to go through the long and expensive probate process. Millennials also do not feel the need to create an estate plan because they do not have a high volume of savings and some only have debt. However, they do not consider the possibility of who will manage their accounts or pay their bills when if become incapacitated. An estate plan allows you to decide how you want to be cared for and to designate a Financial Power of Attorney who will manage your financial affairs for the time that you are incapacitated.
Amy Winehouse’s $6.7 Million Estate
Although far from average, Amy Winehouse serves as a clear case of why it is never too early to start the estate planning process. Amy Winehouse died at age 27 from alcohol poisoning in 2011, and she did not leave a will. As a result, her $6.7 million estate had its worth reduced to $4.66 million after tax and debt deductions. Because of intestate laws, her parents inherited her estate, and her father Mitch Winehouse became the administrator of her estate, even though it had been rumored that they had a “contentious relationship”. Winehouse’s ex-husband, Blake Fielder-Civil, did not receive anything because they are divorced, and Winehouse did not leave a will. So even if she had still loved him, as some had claimed, she was unable to pass on any inheritance to him without a will, even if she had intended to. Likewise, her older brother, Alex Winehouse, did not get any of the inheritance.
Lesson Learned
Amy Winehouse’s case serves as an example of the importance of estate planning. Not only did she lose two million dollars to taxes, her family could have avoided the probate process had she simply planned ahead.
In addition, without estate planning, you lose control over who receives your assets, what assets they will receive after you die, and when they will receive them. A will and/or living trusts are crucial if you want to leave sentimental items to specific people. Although we do not know whether Amy Winehouse’s relationship with her father was in good shape or not, her father ultimately received the rights to her estate, because she did not leave a will and intestate laws allow the state to determine how the estate will be distributed. As a result, she may have ended up giving her assets to her father against her wishes.
It’s Never Too Early to Start Planning
Estate planning might sound like a hassle when you think of all the documents and fees involved. However, simply creating a will is a good start. The cost of the fee to create a will and estate plan is much less than the cost of taxes and lost time due to probate, as well as other additional estate matters which may arise in the future. In the twenty-first century, when the digital age is booming, it is even more relevant for Millennials to plan their estate. Online social media accounts, bank accounts, and any digital wealth should be put in a will or trust so that your wishes will be acknowledged after death. And believe it: estate planning is much easier when handled by a professional estate planning attorney.