Why Property Planning Ought to Be A part of Your Retirement Plan
An often overlooked part of a comprehensive retirement plan is an inheritance plan. Most people are still busy at the beginning of their planning and see retirement as the next step in their life. However, as I have always told my clients, “while I want to bet for you, not against you, it is still important to consider what happens if you don’t survive to retirement.”
The tragic death of Tony Hsieh, 46-year-old former Zappos CEO, reminds us of the importance of estate planning. He left an estate estimated to be worth $ 840 million. Documents filed on behalf of his family stated that they “do not know the existence of a fully executed estate plan and have a good faith belief that the deceased died in the gut” – meaning there was no will.
The deaths of famous and wealthy people are just as terrible as anyone, and their stellar power sheds light on their legacy and the estate planning problems that can arise. There are lessons to be learned that remind us of the importance of addressing estate issues as part of our own holistic planning.
Die without will
Some of the most well known intestinal deaths are those of Prince and Aretha Franklin, and most recently Tony Hsieh.
Prince’s well-documented estate problems persist to this day, more than four years after his death. His estate must not only deal with the interests of several different parties, but also with the business and legal details of his massive musical output.
Aretha Franklin’s estate problems mainly affected the family. While some commentators originally claimed that she really didn’t need a will since her four adult sons would inherit alike, this quickly turned into a more complex situation. First, the lack of a will quickly led to claims that documents found on her couch were evidence that she did indeed have a will. Also, one of her sons has special needs, and it’s not just about giving each child the same check and dealing with the estate. More recently, the property has also come into turmoil over allegations of gross mismanagement, the executor’s resignation, and a host of other issues.
In the case of Tony Hsieh, it is reported that his father and a brother have requested an order to access his accounts and protect his assets. His mother and other brother were listed as family members. We hope this all works smoothly for the family, and it is reasonable to assume that Hsieh, like most people, wants loved ones to get along after he dies.
Forms don’t fix families
Forms don’t fix families
To the extent that a will makes the process of family harmony after death easier, drafting it is a smart idea. From a planning point of view, however, it is important to recognize that a legal document is not a cure for family friction. We saw this after the deaths of rocker Tom Petty and actor Alan Thicke.
When Tom Petty died unexpectedly at the age of 66, he had an inheritance plan. He had appointed his widow to be the sole trustee of his estate, which also includes the rights to publish his music catalog. Petty’s request was that his wife get information from Petty’s daughters about how the property should be managed. Although the succession battles that followed were finally settled, this only came after a very public and costly conflict between the daughters and their mother over the meaning of the word “equally” in the estate documents.
Alan Thicke died after a heart attack while playing hockey with one of his sons. He had established a trust with his sons as co-trustees, but the estate quickly turned into a public battle between them and Thicke’s widow. While the battle appears to have been resolved, tensions reportedly remain.
What we have learned is that estate planning cannot be done in a vacuum and that even with seemingly well-crafted documents there is a risk of family feuds. Good estate planning also requires considering the human element.
No news is good news
The high profile estates going sour make for a good copy while the functioning estate plans don’t get much attention. However, as far as we can get details about the well-functioning plans, they provide positive lessons. A classic example is the Wal-Mart Walton family. This family has maintained their billionaire status in part through effective estate planning begun by Sam Walton in the 1950s. Using GRATs (Grantor Retained Annuity Trusts) and other perfectly legal estate tax techniques, the family has kept their estate and gift taxes under control and grown their wealth through generations.
Celebrities often keep other aspects in mind beyond taxes when creating estate plans. Robin Williams’ unexpected and young suicide death is tragic, and his estate has not been without its challenges. However, his estate planning is likely to achieve one of his goals – controlling his advertising rights after death. Williams protected his advertising rights during his lifetime, and due to careful work with his attorneys, he appears to have achieved the same post-mortem. His trust prohibits any commercial use of his advertising rights for the next 25 years and then transfers ownership of his likeness to the Windfall Foundation, a not-for-profit company focused on the arts and humanities.
Most notable are the goods we never hear of. Names like Steve Jobs and Burt Reynolds were big on life, but why don’t we hear about their lands? Because of good planning. Indeed, through wills, trusts, pre-death family conferences, and a variety of other estate planning techniques, it is possible to keep family matters private after death.
We hope our life path will be to succeed in our chosen careers and then enjoy the fruits of our labor in retirement. It is so important that many of us start retirement planning while we are at work. However, life does not always go as planned, and death can occur before there is a chance to retire. Hence, it is wise to include estate planning in your comprehensive retirement plan.