Home About Archives RSS Feed

The Independent Investor: Estate Planning Is for All of Us

By Bill SchmickiBerkshires columnist
Here is a trick question. What did Aretha Franklin, Tupac Shakur, Martin Luther King, Jr. and Abraham Lincoln have in common? They are all famous people who died without a will.
 
In the case of the "Queen of Soul," she died in August leaving $80 million and according to Michigan state law, those assets should eventually be divided up among her four children. In the meantime, the entire estate must go through the probate process, which is both expensive and time-consuming.
 
Some other famous people who failed to prepare their heirs and beneficiaries for their eventual death are: Jimi Hendrix, Bob Marley, Howard Hughes Sonny Bono, James Brown, Prince, and Michael Jackson. Some of these unclaimed estates are still going through the probate process and could remain there for years to come.
 
One might assume that those with a great deal of money would make sure that their estate was protected. After all, they have the money and the opportunity to hire the expertise they needed to put things in order. Obviously, in the above cases, that wasn't true.
 
Therefore, it should come as no surprise that roughly 64 percent of Americans don't have a will. That number is even higher for younger people (over 70 percent for those 45-54 years old). The most common answer for those questioned is that they simply have not gotten around to it. About 25 percent just don't feel that it is urgent.
 
Some other reasons people procrastinate are that it is depressing to face the eventuality of your own death. Others believe that lawyers are expensive and wills and such are costly. The same people usually underestimate the worth of their assets, believing they don't have much to distribute. In my experience, for example, many of my clients fail to include their largest asset, their home, when computing how much they are worth.
 
Typically, a will spells out who will serve as the executor, who will receive your assets, and under what terms. If you die without one, you are considered intestate. Under intestacy laws, who gets your assets is pre-determined, according to the degree of your relationships. You are also at the mercy of whatever state and/or Federal income and inheritance taxes may be due as well as the legal expenses in settling the estate through a probate court.
 
At our shop, most clients go through the estate planning process as a matter of course. We make sure that every investment account that we manage has an updated beneficiary listed but there is much more to it than just that. I asked Zack Marcotte, our financial planner, how he handles new clients without an estate plan.
 
"For most people, I like to see they have their basics covered — a will, a power of attorney, health care proxy, and don't forget to list of beneficiaries on every account that allows it, specifically your retirement accounts and insurance policies," he explained.
 
"One of the biggest issues I tend to see is neglecting to update beneficiaries after a divorce, death, or other change in circumstances; so make sure you look them over once a year. These are the basics that will cover most of the gaps people are exposed to; however, you should always seek legal counsel to provide personalized advice."
 
Bill Schmick is registered as an investment adviser representative and portfolio manager with Berkshire Money Management (BMM), managing over $400 million for investors in the Berkshires.  Bill's forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

 

     

Support Local News

We show up at hurricanes, budget meetings, high school games, accidents, fires and community events. We show up at celebrations and tragedies and everything in between. We show up so our readers can learn about pivotal events that affect their communities and their lives.

How important is local news to you? You can support independent, unbiased journalism and help iBerkshires grow for as a little as the cost of a cup of coffee a week.

News Headlines
Clarksburg Sees Race for Select Board Seat
Crosby/Conte Statement of Interest Gets OK From Council
WCMA: 'Cracking the Code on Numerology'
BCC Wins Grant for New Automatic External Defibrillator
Clark Art Screens 'Adaptation'
Drury High School to Host End-of-Year Showcase
Clarksburg Gets 3 Years of Free Cash Certified
Pittsfield CPA Committee Funds Half of FY24 Requests
MCLA Men's Lacrosse Falls in League Opener
Letter: Vote for Someone Other Than Trump
 
 


Categories:
@theMarket (480)
Independent Investor (451)
Retired Investor (184)
Archives:
March 2024 (6)
March 2023 (2)
February 2024 (8)
January 2024 (8)
December 2023 (9)
November 2023 (5)
October 2023 (7)
September 2023 (8)
August 2023 (7)
July 2023 (7)
June 2023 (8)
May 2023 (8)
April 2023 (8)
Tags:
Election Greece Metals Taxes Banking Pullback Recession Crisis Stimulus Rally Banks Congress Japan Bailout Debt Employment Markets Deficit Euro Currency Jobs Energy Europe Stock Market Stocks Interest Rates Selloff Debt Ceiling Economy Retirement Europe Commodities Fiscal Cliff Oil Federal Reserve
Popular Entries:
The Independent Investor: Don't Fight the Fed
Independent Investor: Europe's Banking Crisis
@theMarket: Let the Good Times Roll
The Independent Investor: Japan — The Sun Is Beginning to Rise
Independent Investor: Enough Already!
@theMarket: Let Silver Be A Lesson
Independent Investor: What To Expect After a Waterfall Decline
@theMarket: One Down, One to Go
@theMarket: 707 Days
The Independent Investor: And Now For That Deficit
Recent Entries:
The Retired Investor: Immigrants Getting Bad Rap on the Economic Front
@theMarket: Sticky Inflation Slows Market Advance
The Retired Investor: Eating Out Not What It Used to Be
@theMarket: Markets March to New Highs (Again)
The Retired Investor: Companies Dropping Degree Requirements
@theMarket: Tech Takes Break as Other Sectors Play Catch-up
The Retired Investor: The Economics of Taylor Swift
@theMarket: Nvidia Leads Markets to Record Highs
The Retired Investor: The Chocolate Crisis, or Where Is Willie Wonka When You Need Him
The Retired Investor: Auto Insurance Premiums Keep Rising