For the next 20+ years, the greatest wealth transfer in the history of the world is taking place right here in America.
by Jack K. Robinson
Jack K. Robinson, Attorney at Law
What is happening?
Baby Boomers, the generation of people born between 1944 and 1964, are expected to transfer $30 trillion in wealth to younger generations over the next 20 years. In no prior time in the history of of the world has such a vast amount of jaw dropping wealth moved through the hands of generations.
What is the problem?
1. Do not want to think about their mortality.
2. Uncomfortable telling strangers personal details.
3. Not ready to make important life decisions.
4. Unaware of the consequences of not having a will.
5. Avoiding dealing with family issues.
6. Disagreement between spouses or partners about having a will.
7. Belief that it takes too much effort.
8. Unsure where to start.
9. Young people do not need wills.
10. Only wealthy people need wills.
Saga of just a few rich & famous people who failed to plan before they died
1. Jimi Hendrix
Although Jimi Hendrix died in 1970, the battle over his estate raged on for more than 30 years for one simple reason: Hendrix left no will regarding the distribution of his estate. To complicate matters, the estates of musicians and other artists often continue to generate money long after their deaths.
2. Bob Marley
Like Jimi Hendrix, Bob Marley’s estate continues to generate significant revenue despite the fact that Marley died in 1981. Also, like Hendrix, Bob Marley died intestate even though he knew he had cancer and lingered for nearly eight months. His estate, worth a reported $30 million, had dozens of claimants.
3. Salvatore Phillip “Sonny” Bono
Sonny Bono “the politician” died an untimely death in a skiing accident in 1998, but why he died without a will is something we’ll never know. Instead of staying at home to grieve, his widow Mary Bono headed to the courthouse to be appointed the estate’s administrator. Ex-wife Cher showed up on the scene as a claimant in Bono’s estate and a “love child” surfaced soon after that, making the situation even more difficult.
4. Stieg Larsson
Swedish author Stieg Larsson who wrote The Girl with the Dragon Tattoo, among others, died in 2004. Like many others, Larsson died without a will and Swedish law dictated that Larsson’s estate was to be divided up between his father and his brother. His lifelong partner of 32 years, Eva Gabrielsson, received nothing, although the family did grant her ownership of the couple’s apartment.
5. Pablo Picasso
Pablo Picasso died in 1973 at the age of 91, leaving behind a fortune in assets that included artwork, five homes, cash, gold and bonds. Because Picasso died intestate and left no will, it took six years to settle his estate at a cost of $30 million.
6. Michael Jackson
Immediately following Michael Jackson’s death in July 2009, his mother filed court papers claiming that Jackson died intestate. Like Hendrix and Marley, Jackson’s estate continues to generate money. In the years since his death, his estate generated over $242 million.
Legendary singer Prince died at age 57 in April 2016. The fact that he didn’t leave a will also led to uncertainty about the future of his estate. The absence of a will produced many claimants, including individuals purporting to be his earlier unknown wife, sibling, child, and distant relative.
8. Howard Hughes
Howard Hughes was an eccentric billionaire who died in 1976 at the age of 70. When he died, his will was discovered at the Mormon Church’s headquarters in Salt Lake City. However, the will was proved to be a forgery in a Nevada court and his estate was divided among his 22 cousins.
9. Abraham Lincoln
Abraham Lincoln, the nation’s 16th president, has the distinction of being the first president to be assassinated (1865) as well as the first president to die without a will—despite being a lawyer himself.
10. Aretha Franklin
Legendary singer Aretha Franklin died at the age of 76 on Aug. 16, 2018, after a long struggle with pancreatic cancer. Her music catalog has great value and continues regenerating substantial revenue each year since her death.
How does this situation impact your practice?
1. Clients are everywhere.
2. Many of the needs are simple to resolve and can have a dramatic impact in the lives of the people you help.
3. Satisfying work to do.
The reasons every Texans needs an estate plan.
Estate planning isn’t only for the rich. Without a plan in place, there will be long-lasting impacts on your loved ones, even if you don’t have an expensive home, large IRA or valuable art to pass on. Estate planning is a simple, loving act of directing where your stuff goes after your die and telling your family how you want to experience the end of your life.
Based on spending years helping families create estate plans and handling the probates to implement these plans, these are things that are not fun to think about. At the same time, it is a critical step in making sure:
- Loved ones are taken care of after you are gone.
- You know how you want to be cared for when you are no longer able to take care of yourself.
Most people would rather spend time planning a vacation, deciding what car to buy, or where to eat dinner. They do not want to think about who will get their stuff after they die. They do not want to think about how they want their end of life experience to be handled. The problem with ignoring this important task is you leave behind sad and bewildered family members to sort out the mess you left them.
So what are the reasons every Texans needs an estate plan?
1. Estate planning ensures your wealth goes to intended beneficiaries.
The State of Texas has written a will for you. This will is created by the intestacy statute. The language in the Texas intestacy statute is mind-boggling. Read this statute and you can see how it will result in your stuff going to unintended beneficiaries. Create an estate plan and none of this will happen. You decide where your stuff goes.
2. Protect families with young children or blended families.
Do not let a judge decide who will care of your minor children. Nobody plans to die before their children are adults. It does happen. In your will, until the children are adults, you want to name:
- A guardian to take care of the children.
- A trustee to manage the money your children receive.
Without a will where you name the guardian, the judge steps in. It will be the judge deciding who will raise your children. It will probably be someone you would not choose.
3. Do not let a judge decide who manages the money for your minor children.
Young children or children with poor money management sense need help. A will with a trust and a trusted person to manage the trust assets is essential. You pick the person for this important job who will:
- Use the assets in the best interest of the children.
- Not waste the assets on frivolous expenditures.
- Release the money left in the trust when the children reach the age you select.
Yours, Mine & Ours! Protect Everyone in Blended Families. Second marriages can be wonderful things — exciting, fulfilling, and rarely dull! That said, blended families have their own special challenges in estate planning. Both of you:
- May have children from previous relationships and children together.
- You each may have property and other assets you’ve brought to the relationship.
- If you’re like most people, you want to provide for your spouse’s needs, while ensuring that your property (or much of it) ultimately will go to your children.
- Providing for everyone you love can get tricky, but not impossible.
- Both of you need an estate plan that fits you both. Without an estate plan, you have no control over where your stuff goes. Relying on your spouse and children to “work it out” is not a plan. Estate planning is a simple & loving act of:
- Directing where your stuff goes after your die,
- Telling your family how you want to experience the end of your life.
4. Avoid The Time And Costs Of Probate
Assets you own in your individual name at the time of your death are subject to probate. Probate can be time-consuming and may involve significant costs. Executing a simple will does not avoid probate but there are several ways to do so:
- Create a revocable trust and transferring your assets to the trust during your life.
- Own your assets jointly.
- Provide for the disposition of your assets pursuant to a transfer on death or beneficiary designation.
5. Name Your Personal Representative
If you die with any assets owned in your individual name, these assets must be administered under the direction of the probate court before they can pass to the beneficiaries. By executing a will, you can specify whom you would like to serve as your personal representative to handle your probate estate.
The personal representative has a significant amount of responsibility, from paying your debts and expenses, to deciding how your specific items of property will be allocated among your beneficiaries. The personal representative also has the discretion to liquidate your assets, and distribute the cash proceeds, or distribute your assets in-kind to the beneficiaries. It is important to select the right person to be your personal representative.
6. Make Sure Your Assets Stay In Your Family If Your Spouse Remarries
If your spouse survives you and your estate plan leaves everything to your spouse, what happens to the assets when they die? Your spouse may leave the assets to the new spouse.
7. Protect Your Assets From Future Creditors
If you have potential creditor problems or work in an industry that is often subject to litigation, then there are several options available to isolate your assets from future creditors. Trusts are a good option and can protect against claims to your assets.
8. Estate Planning Spares Heirs A Big Tax Bite
Estate planning is all about protecting your loved ones. A big protection is keeping the IRS away. A big goal in estate planning is transferring assets to heirs with the smallest tax burden possible. Even with just a little bit of estate planning, you will reduce or eliminate taxes. Without a plan, the amount your heirs will owe Uncle Sam could be quite a lot.
9. Eliminates Family Messes When You Are Not Available
We’ve all heard those horror stories that when someone with money dies, the warring between family members begins.
- One sibling may think they deserves more than another sibling.
- One sibling may think that they should be in charge of the finances even though they are notorious for racking up debt.
- Squabbling can get ugly and end up in court, with family members pitted against each other.
These kinds of messes only happen when there has been no estate planning. With an estate plan, you choose who controls your finances and assets if you become mentally incapacitated or after you die. A good estate plan helps prevent any family strife and ensure your assets are handled the way want them to be.
10. Avoid A Guardianship Upon Incapacity
If you do not have a valid durable power of attorney for financial decisions, if you become incapacitated then no one can take care of your business.
11. Direct Your Family And Physicians How To Make Health Care Decisions
In the event you became incapacitated, a doctor will be responsible for making medical decisions on your behalf. If you execute a medical directive and a medical power of attorney, then you pick an agent, someone you trust to honor your choices, to make these decisions for you. In a medical directive you tell your agent and doctor exactly how you want the end of your life handled.
10 tips I have learned while practicing estate planning
1. Who is your client.
2. What are your limitations.
3. Recognize when a fight is brewing.
4. Document production.
5. Help clients identify problems not on their radar but which are rolling around in their brains.
6. Be a hero – provide no cost tips to help them.
7. Intestate succession.
9. Be true to yourself .
10. The estate plan for Everyman.
Jack K. Robinson is a veteran Texas lawyer with over 34 years of experience. Jack’s office is located in Rockwall, Texas, and works cases in Collin, Dallas, Hunt, Kaufman and Rockwall counties. He specializes in family law matters, probate and estate planning issues.
“Once men turned their thinking over to machines in the hope that this would set them free. But that only permitted other men with machines to enslave them… what the O.C. Bible should’ve said is: ‘Thou shalt not make a machine to counterfeit a human mind.” Frank Herbert, The Illustrated Dune (New York: Berkley Windhover, 1978), p. 12.