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August 18, 2023 | Things We Should Do: Make An Estate Plan

John Rubino is a former Wall Street financial analyst and author or co-author of five books, including The Money Bubble: What to Do Before It Pops and Clean Money: Picking Winners in the Green-Tech Boom. He founded the popular financial website in 2004, sold it in 2022, and now publishes John Rubino’s Substack newsletter.

A big part of prepping is about our families rather than ourselves. That is, we want to set things up so our loved ones are protected from the risks they’ll face in the coming hard times.

This isn’t usually a problem because buying and organizing precious metals, guns, and food-producing land is fun. But there’s one part of the process that is not fun for most people: getting our financial lives in order. As radio financial guru Dave Ramsey likes to say, if you really hate your family, die without a will.

Here’s an excerpt from a longer, must-read article from the Nestmann Group that begins with a cautionary tale and ends with some actionable advice.

This Is What Happens When You Screw Up Your Estate Plan

Who can forget the soaring voice of Aretha Franklin? Whether singing a gospel standard like “Amazing Grace” or a huge hit like “Respect,” Franklin’s talent and determination helped her build an $80 million estate, with ongoing earnings from music, licensing, and royalties.

But sadly, Franklin didn’t create a coherent estate plan before she died in 2018. Initially, her children thought that she died without a will. Under Michigan’s intestacy laws – the rules that apply when someone dies without a will – her assets would be divided equally among her four sons.

However, over the next few years, a total of four wills were found:

  • Two handwritten wills prepared in 2010, one of which was signed on each page and notarized.
  • A handwritten will prepared in 2014, found under a couch cushion in Franklin’s home and signed only on the last page.
  • A typewritten will prepared in 2018 by a law firm in Franklin’s home but left unsigned.

It’s not as if Franklin didn’t know she needed an estate plan. She was diagnosed with cancer in 2010, and her early wills appear to have been an attempt to set down her thoughts on who would inherit her wealth. And she was obviously trying to complete her planning in the months before she died. But in the end, her estate was settled in the harsh limelight of court by a jury in Michigan. Last month, it decided that the 2014 will was valid.

As of 2020, the lawyers handling the case had billed the estate $586,566 for handling the probate case. A public filing in March 2023 revealed another $900,000 in legal fees over the previous 12 months.

That’s why we recommend to our clients that no matter how much wealth they possess, they prepare four basic estate planning documents:

  1. A living will, which describes the type of care you desire if you become permanently incapacitated or terminally ill. For instance, it will address the circumstances under which you wish to receive treatment possibly prolonging your life.
  2. A durable power of attorney for health care, which is a formal appointment of someone you trust to be your health care agent. This person will make the necessary care decisions for you if you are unable to do so. (A living will and durable power of attorney for health care are ordinarily combined in one set of instructions, called an advance directive.)
  3. A durable financial power of attorney, which assigns someone you trust the authority to act in your place. It comes into effect if you ever become physically and/or mentally incapacitated. Once it does, the person you name in this capacity will be acting in a manner legally equivalent to guardianship. They will take care of important matters for you – paying bills, managing investments, etc.
  4. A “regular” will, which memorializes your instructions for the division of your wealth among those you care about. The individual or company you name in your will as your executor, or “personal representative” in some states, must present your will to probate court. A judge will then authorize the executor to gather your assets and distribute them to your beneficiaries after any debts are paid.

You don’t need a lawyer to get started. Search online for “the best legal forms sites” to find some companies that walk you through the process of identifying and printing out forms for the above documents. Fill them out and decide who should play what role in your estate. And then find a lawyer to look them over and help you decide how and where to store the forms. Your family will be eternally grateful.

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August 18th, 2023

Posted In: John Rubino Substack

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