Tony Hsieh, former CEO of Zappos, died at 46 due to smoke inhalation from a house fire over the Thanksgiving holiday. Several months prior, Hsieh retired from his position as CEO of Zappos with an estimated net worth of $840 million.1 Since his death, his family has determined he died intestate, meaning he had no will. In response, his family has filed for access to the former CEO’s accounts and assets.2
Earlier this year, “Black Panther” star Chadwick Boseman lost his battle with colon cancer - Boseman also died intestate. His wife has since had to file paperwork in probate court to gain access to his estate, which has an estimated value of about $938,500.3
The moral of the story? No one, no matter how much they have, is immune to an untimely death. And while you may not have a net worth of $840 million, your assets are still significant and require proper planning.
In simple terms, if you die without a will, the state will essentially make one for you. This means your estate passes through something called intestate succession. The purpose of intestate succession is to have one’s assets passed on to their heirs as they (meaning a normal, reasonable person) likely would have wanted. This, of course, requires assumptions on the behalf of the state that may not always be accurate.
Each state will differ in how intestate succession proceeds, but it’s common that one’s close relatives would be granted assets first. Close relatives could include a surviving spouse, descendants (children or grandchildren), parents, siblings, nephews and nieces, grandparents, etc.
Who Should Have a Will?
Only 44 percent of Americans have a will. While that number alone is troubling enough, here’s the kicker: that number has actually declined in recent years. In 2005, around 51 percent of Americans reported having a will.1 It should come as no surprise, however, that the majority of will-holders were older Americans. And while that’s understandable, the hard truth is - anyone can die at any age. Remember - both Hsieh and Boseman were only in their forties when they passed earlier this year.
Whether it’s a couple thousand or a couple million in the bank, everybody should have a will. A will lets others know how you would like your belongings cared for and distributed after your passing. Without one, there’s a much higher chance of your assets ended up in the hands of those you may not have wanted to - and cost your surviving loved one's unnecessary time, hassle and legal fees.
What Happens When You Die Without a Will?
While proportionately more high-net-worth people have wills than those with low-to-moderate income levels, that doesn’t mean millionaires and billionaires are always prepared. High-profile high-earners like Aretha Franklin, Prince, Jimi Hendrix and Pablo Picasso all died without a proper will in place.4 For many, this left their heirs and their estates tangled up in years of costly and unnecessary legal battles.
Money aside, the fights that ensue for a passed love one’s estate can be messy and scarring. A lack of proper planning can leave family ties permanently severed - especially so for those battling over a significant amount of assets.
Leaving this world with a proper will in place is a final, and important, gift you can give your loved ones. It avoids long legal battles, exorbitant fees and unnecessary headaches - all things no grieving family wants to deal with. If you haven’t already, talk with your financial professional about the future of your estate. They may be able to help you directly or refer you to an estate attorney who can begin the drafting process.
What About Your Social Security, Pensions And Investments?
A will provides guidance on how any assets that flow through probate will be distributed when you die. However not all assets or income sources need to go through probate. There are many things that you can do help avoid probate and make sure that your hard-earned assets pass quickly and efficiently to the ones you love.
Simple things like understanding social security survivorship benefits, consider your pension elections prior to claiming and understanding how different kinds of investment accounts pass can help you feel more comfortable about how you will leave your assets to your loved ones.
At Reed Financial Planning Services, LLC, legacy planning is a key component of what we do with our clients. We can explain social security and pension survivorship options, review your investments and help you understand the ways you can pass these assets to your heirs more efficiently.
If you would like to schedule a time to talk to us about your situation, ask your questions and develop a sound legacy plan, we would be happy to help you. Click on the link below to schedule your phone consultation.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.