Why Everyone Needs an Estate Plan, Especially Now

Regardless of income or net worth, estate planning is indispensable for all families, as recent events have demonstrated. Families may encounter conflicts, unexpected expenses, and the potential for unintended inheritances in the absence of a structured plan. In fact, a plethora of recent cases have underscored the complications that result from inadequate estate planning. Families have been embroiled in intricate legal disputes when assets are not properly designated through a will or trust (Cerity Partners, CerityPartners.com).

In a notable instance, the estate of musician Prince was subjected to years of litigation and exorbitant legal fees. Prince’s family was left without a will to clarify his intentions following his sudden death in 2016. This resulted in prolonged litigation and millions of dollars in expenses before the estate was resolved in 2022. The estate’s distribution was the subject of years of debate among heirs, administrators, and tax authorities due to its complexity, which was estimated to be worth approximately $156 million. These protracted legal disputes serve as a reminder that estates may endure substantial losses and family relationships may be strained by financial stress in the absence of clear guidance.

Aretha Franklin’s estate was another well-known case in which she left conflicting handwritten wills. The publicized court battle that resulted from the disputes between her sons regarding the validity of each document could have been prevented with a formal, unambiguous will. The inheritance process was delayed and division within her family was exacerbated by the ambiguity in her estate plans.

The vulnerability of assets to probate complications, extended legal fees, and familial discord is exemplified by cases such as these when estate plans lack clarity. Recent research conducted by organizations such as Wealth.com and Caring.com has confirmed that beneficiaries may encounter costly, stressful, and protracted processes to resolve inheritances in the absence of a will or trust, particularly when large sums or public figures are involved. These instances serve to underscore the significance of proactive estate planning in safeguarding both assets and relationships, thereby preventing successors from prolonged and frequently distressing legal disputes.

The present federal estate tax exemption is an additional critical factor to consider in the present moment. The exemption has increased to $13.61 million; however, it is on track to decrease to approximately $7 million in 2026 unless Congress takes action. This change may result in a considerable portion of their wealth being lost to taxes for those with substantial assets who fail to plan in a timely manner. Estate planning is not solely concerned with the reduction of taxes; it also involves safeguarding assets from the probate process, which can be time-consuming, expensive, and distressing for family members (Wealth.com, “Legal Trends In Estate Planning 2023: Part 1”).

Additionally, estate planning guarantees that assets are distributed to their intended beneficiaries, which is particularly important in families with stepchildren or multiple marriages. A well-defined estate plan, which may involve the appointment of specific trustees or executors, can assist in the prevention of disputes and offer direction for the distribution of assets. This has become increasingly crucial as research indicates that the number of Americans with wills is decreasing, with a mere 46% of those aged 55 and older having a will, according to the 2023 Caring.com Wills and Estate Planning study (MCV Law, mcvlaw.com).

Furthermore, estate planning laws are undergoing a transformation, as states are now contending to secure trust business. Certain states have amended their trust laws to permit “directed trusts” and extend the duration of trusts. These trusts enable distinct parties to make investment and distribution decisions, thereby improving the control of assets for the parties involved. As experts in the industry have reported (Cerity Partners, Wealth.com), the necessity of informed planning that adheres to intricate and state-specific regulations is underscored by the increasing flexibility.

By acknowledging the advantages of estate planning and the hazards of neglecting it, families and individuals may be motivated to take action before it is too late. This proactive approach not only safeguards assets but also guarantees a legacy for future generations that is free of superfluous burdens or conflict.