News and Commentary

Lack of Estate Planning Can Lead to Years of Legal Woes by Scott Montgomery, CLU, ChFC

As the saying goes, there are only two certainties in life: death and taxes. An unwillingness to plan for either is a recipe for disaster. Individuals who pass away without a will essentially hand the keys to their kingdom and control of their assets over to the states where they reside. Without a will, intestate laws will determine who should receive those assets, which will become public through the probate process and subject to federal estate taxes and probate fees when they are not properly structured.

As an example, consider the premature death of legendary performer Prince, who passed away without a will in 2016. In the days and weeks following his death, more than 45 people came forward claiming to be legitimate heirs of the artist’s estimated $200 million estate. It took the court one year to determine the six rightful heirs to Prince’s estate, which by that time had dwindled to half the original amount due to taxes and legal fees. Moreover, the court did not immediately allow those rightful heirs to receive their share of the estate for another year pending additional claims or appeals. As of April 2018, Prince’s estate remains the subject of legal battles between the heirs and the administrator of and attorneys for the estate.

The list of famous people who did little to plan their estates includes musicians such as Michael Jackson, Amy Winehouse and Bob Marley. Also included on this list are well-established business people, such as South Florida sports team icon Joe Robbie, and attorneys, such as former president Abraham Lincoln.

Not everyone has to worry about leaving behind an estate valued at more than $200 million. However, it is important that individuals at all income levels take the time during life to plan for what will happen to their assets and their survivors at the time of their eventual death.

Estate planning allows individuals to consider the entirety of the assets they own, such as personal property, retirement savings or a family business, in the context of their personal wishes, responsibilities and family relationships and needs. It considers all of life’s “what-if” scenarios and prepares individuals and their families to manage these situations quickly and with the confidence in knowing that they abide by an individual’s wishes. For example, a living will and durable health-care power of attorney allows individuals to plan and memorialize in writing their wishes should they become incapacitated. Similarly, a financial power of attorney provides individuals with the freedom and control to appoint someone they know and trust to oversee their financial affairs when they are no longer able to do so.

Equally important in the estate planning process is a will appointing executors and naming beneficiaries. While this document may eliminate a significant amount of legal challenging by legitimate and illegitimate claimants, it cannot avoid the expense, delay and publicity of probate. To tackle this challenge, individuals should consider creating a revocable living trust with properly titled assets to be distributed to beneficiaries in a timely manner outside of probate. Yet, neither a will nor a revocable trust could reduce an individual’s exposure to the federal and state inheritance tax of as much as 50 percent of his or her estate. In order to realize a significant reduction in these tax liabilities and share more of their wealth with surviving family members or charitable organizations, individuals should engage in proactive planning under the guidance of experienced advisors.

By failing to address and plan for these issues during life, individuals will millions or even a small nest egg will give up control over their legacies and leave behind an immense burden for family members.

The professionals with Provenance Wealth Advisors work closely with domestic and foreign individuals to assess current financial, familiar and business circumstances and develop comprehensive estate plans that overcome complexities and meet desired goals.

 

About the Author: Scott Montgomery, CLU®, ChFC®, is a director with Provenance Wealth Advisors, an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors and Accountants, and a registered representative with Raymond James Financial Services.  For more information, call (954) 712-8888 or email info@provweath.com.

Provenance Wealth Advisors (PWA), 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.

 

Scott Montgomery is a registered representative of and offers securities through Raymond James Financial Services, Inc., Member FINRA/SIPC.

 Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants. PWA is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc., and Provenance Wealth Advisors.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of the advisors of PWA and not necessarily those of Raymond James. The information contained in this report does not purport to be a complete description of the developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Investments mentioned may not be suitable for all investors.

You should discuss any tax or legal matters with the appropriate professional. Prior to making an investment decision, please consult with your financial advisor about your individual situation.


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