FinEdFriday: The Cost of Not Having a Will
Confession: I know we can get annoying with how much we harp on family estate planning. It is not something any of us tend to (or want to) think about! But there is a reason why, regardless of age or asset level, we want to make sure you consider having proper estate planning documents created and signed.
Tony Hsieh, former CEO of Zappos, died at 46 due to smoke inhalation from a house fire over the 2020 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 last year, “Black Panther” star Chadwick Boseman (one of our favorites) 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.
Understanding Intestacy
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 last 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 ending up in the hands of whom you may not have wanted - 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 (famous) 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. And to put it plainly, when you die without a will, you make the emotional process that much more complicated for those who must take care of what you left behind.
Take it from people who have experienced this in real time, 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.
- https://news.gallup.com/poll/191651/majority-not.aspx
- https://apnews.com/article/connecticut-fires-tony-hsieh-las-vegas-nevada-e1a53077be6f75b4b147780a1686a00c
- https://www.usatoday.com/story/entertainment/celebrities/2020/10/16/chadwick-boseman-died-no-will-wife-seeks-administer-estate/3686177001/
- https://www.legalzoom.com/articles/10-famous-people-who-died-without-a-will
This content is developed from sources believed to be providing accurate information. 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.