“It has been a long six years,” Prince’s lawyer L. Londell McMillan said in a 2022 hearing. That occasion marked an agreement with the IRS on a $156 million value on Prince’s real estate and recordings for the artist who died in April 2016—without a will.¹

What can we learn from celebrity estate planning disasters like this? It turns out, plenty. Such cautionary tales prove the value of proper planning. With 63 percent of Americans making $80,000-plus a year saying they “just haven’t gotten around” to estate planning, there’s plenty of room for improvement in that department.²

As a financial planner, you’re well-positioned to collaborate with a client’s estate attorney to make sure their wishes are carried out. If your clients need a little nudge to get going on creating or updating an estate plan, these three examples might help illustrate the consequences of when wealth transfer goes awry.

Mistake #1: Never Making a Will

Prince Rogers Nelson’s death at age 57 was tragic, and the tragedy compounded when it became clear the superstar musician didn’t have an estate plan. With proactive legal and financial advice, the conflict over his name and likeness, large tax bill, and lengthy settlement process wouldn’t have been a foregone conclusion.

A judge declared that his six siblings were his official heirs in 2017, but two of them died before the estate was officially settled. About $5 million of the $156 million estate will be exempt from federal tax, after which the rate is 40 percent, and Minnesota state law exempts the first $3 million, with the remaining taxed at 16 percent. Experts say an eight-figure estate tax bill is the likely result.

As part of your client’s financial team, you can help them transfer wealth efficiently and intentionally in a variety of ways, including charitable giving. In offering to meet with a client’s estate attorney, you can offer reassurance that they’ll have an expert in their finances at the table to ensure their plan is comprehensive in nature.

Once the estate plan is in place, it’s best practice to regularly check that beneficiaries are up-to-date and assets are titled correctly. You can also stress-test the plan and show how changes in the law or the client’s situation might impact wealth transfer, further offering peace of mind.

Mistake #2: Not Telling Loved Ones Where to Find a Will

Florence Griffith Joyner, an Olympic sprinter known worldwide as Flo Jo, died of a seizure at age 38 in 1998. Relatives thought she had written a will, but her husband could not locate it and file it within 30 days, per California law. Her estate went through a lengthy probate process, and her husband and mother had a legal battle over one of her properties.³

There are ways to ensure your clients don’t pour money and energy into creating an estate plan that no one ever sees. Many financial planners offer clients a secure online vault where they can upload estate planning documents. This is a useful tool for coordinating their financial plan with their estate planning, in addition to being a backup for the original copy of the will.

There are also many stories of planners catching mistakes after clients share documents, such as estate paperwork that lacks the proper signatures. When you consider that 80 percent of widows change advisors after their partner dies, it becomes clear how critical it is to proactively plan for a family in case the unthinkable were to happen.⁴

Mistake #3: Leaving Loose Ends in Business

He rose to fame creating “happy little trees” on the Joy of Painting from 1983 to 1994. But Bob Ross’s name is in headlines nearly three decades after his death in 1995 because of an unfulfilled wish in his estate plan.

The 2021 documentary Bob Ross: Happy Accidents, Betrayal & Greed explores a prolonged battle between his former business partners and his family. The issue at hand is an amendment to the painter’s trust that transferred all his intellectual property rights to his son and half-brother. A judge eventually ruled that it was invalid and that Bob Ross had transferred these rights to his business partners via oral contracts while alive.⁵

Estate planning for entrepreneurs is essential to avoid these sorts of conflicts. A well-coordinated estate plan for a business owner will allow for a smooth transition of the business. It should also proactively plan for any estate taxes. Because most business assets aren’t liquid, paying these taxes can force the sale of a business, leading to further upheaval.

You can help your clients who are business owners protect what they’ve worked hard to build by being an active member of their financial team and encouraging them to plan for the future of their business. Through open communication with their estate attorney, you can help ensure a well-coordinated estate plan.

Estate Planning Disasters Extend Beyond VIPs

The stars are just like us in that they make mistakes in their planning or procrastinate and fail to plan. As a financial planner, you know the big picture of your clients’ finances and have their best interests in mind. As their advocate, you can provide important input when it comes to their legacy. A well-coordinated estate plan, after all, does not happen by accident.

Listen in on Estate Planning Conversations

To get a glimpse into how these conversations might play out in real life, watch the video below of me and Joe Buhrmann, CFP®, CLU®, ChFC® presenting Candid Conversations: Helping Clients Prepare for the Death of a Loved One. We role-play an estate planning scenario to offer insight into how to apply counseling techniques in your practice.

 

Read Our Candid Conversations Guide

Want to dive even deeper into end-of-life planning? Read our new eBook, Candid Conversations: Estate Planning. It provides financial planners like you with practical techniques and tactics to foster candid conversations about death, dying, and estate planning, with examples and sample dialogue.

Sources:

1. “Final Valuation of Prince’s Estate Pegged at $156.4 Million.” U.S. News and World Report, January 15, 2022.

2. “2022 Wills and Estate Planning Study.” Caring.com, April 11, 2022.

3. “Famous People Who Died Without Proper Planning.” Broadridge, October 13, 2022.

4. “Op-ed: The loss of a spouse or partner creates huge financial risk. Here are tips to protect your money.” CNBC. April 27, 2022.

5. “Who Are Annette and Walt Kowalski? The Embittered Legal Battle Over Bob Ross’ Legacy.” Newsweek, August 26, 2021.

DISCLAIMER: The eMoney Advisor Blog is meant as an educational and informative resource for financial professionals and individuals alike. It is not meant to be, and should not be taken as financial, legal, tax or other professional advice. Those seeking professional advice may do so by consulting with a professional advisor. eMoney Advisor will not be liable for any actions you may take based on the content of this blog.

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