What We Can Learn From the Cautionary Tale of Prince’s Estate Planning

What We Can Learn From the Cautionary Tale of Prince’s Estate Planning

The world was in shock last week when news broke that pop icon Prince died unexpectedly in his home at the age of 57. As his greatest hits filled the airwaves again and tributes to the star began to flood social media, the financial media began asking, Who will inherit his assets?

Then came the realization that Prince, who has no known children and no current spouse, may have never gone on record with his wishes. As of now, no will has surfaced, and his sister recently filed documents to open probate to begin divvying up his estate—a process that is likely to be a lengthy undertaking, considering his assets have been estimated at more than $300 million.

Learnvest

Get started with a free financial assessment.

While it may seem strange that someone as rich and famous as the Purple One could have died without a proper estate plan, it’s probably not as uncommon as you’d think: A 2014 survey by Rocket Lawyer finds that 64% of Americans don’t have a will.

And you don’t have to be a millionaire to create an estate plan. Putting one in place will save your family a lot of headache in the event that you pass away, no matter how large your assets are. So we thought this would be a good opportunity to remind everyone of the six key documents to start gathering in order to protect your money—and your family—in the event of your passing:

1. Beneficiary Forms

This paperwork indicates who gets the assets in your 401(k)s, IRAs, life insurance policies and other financial accounts upon your death. These designations actually trump any directives stated in a last will and testament, so it’s important to keep them up to date.

2. POD and TOD Designation Forms

A payable on death (POD) form typically designates who should receive the money in your checking or savings accounts upon your death. A transfer on death (TOD) form is similar to a POD form but is typically used for brokerage accounts and a TOD deed indicates who takes over the deed to your home after you die.

3. Durable Power of Attorney Forms

A durable power of attorney names someone to make health care or financial decisions for you in the event you become too sick or incapacitated to make them for yourself.

4. Living Will

Sometimes called an advance health care directive, this document goes into detail about how you want your doctors to treat you should you become unable to communicate those wishes (for example, whether to leave you on life support).

5. Last Will and Testament

This document, which is often confused with a living will, outlines how you want your assets divided as well as who should become guardian of any of your children under the age of 18. Just note that creating a will doesn’t mean that your family will avoid court proceedings: A will still has to go through probate, but it guides the court in helping to fulfill your wishes.

6. A Living Trust

Similar to a will, a living trust details how you want your property and funds distributed and who will take care of your minor children. This document also appoints a trustee to carry out specific wishes for your assets. Unlike a will, any assets you hold in a trust do not have to go through probate—and a trust can be used to help manage your assets and property while you’re still alive.

RELATED: Wills and Trusts 101

LearnVest Planning Services is a registered investment adviser and subsidiary of LearnVest, Inc., that provides financial plans for its clients. Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. LearnVest Planning Services and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies. LearnVest, Inc., is wholly owned by NM Planning, LLC, a subsidiary of The Northwestern Mutual Life Insurance Company.

Learnvest

Financial planning made simple.

Get your free financial assessment.

Related Tags

Get the latest in your inbox.

Subscription failed!

You're Now Subscribed!