I received the following email yesterday from the American Institute of CPAs and it’s right on point. While not directed towards healthcare professionals specifically, we know that physicians are real good at concentrating on their practice finances and investments but sometimes take their eye off their personal affairs, which includes drafting and executing a will. Enjoy the post.
With songs like “Purple Rain” and “Little Red Corvette,” Prince wrote the soundtrack of a generation.
However, his failure to write a will could spell trouble for his $250 million fortune. Last week, people around the world mourned the death of this gifted singer and songwriter, and many were shocked to hear that Prince didn’t have a will or an estate plan in place. Even though he was a notoriously hands-on negotiator who meticulously controlled the intellectual property rights of his song collection, this unfortunate lack of planning has left uncertainty for Prince’s heirs. The future inheritance process could cost tens of millions of dollars in legal fees, and state and federal estate taxes. Surprisingly, he’s not the first famous person who left this world without a plan.
Not yet famous with a quarter billion dollar estate to leave loved ones? It’s still important to draft a will and keep it up-to-date based on changing personal and financial situations. Here are a few tips to make sure you have an effective will:
- Seek out a pro: Seek out the assistance of a CPA or an attorney to draft a will and do estate planning. A CPA will be able to help you navigate a simple will and will be best positioned to help with more complicated estate planning. Having a professional prepare your will eliminates any confusion if you have minor children, own significant assets or want to control the management and distribution of your property. Additionally, you will know that all your intentions are clearly communicated and recorded.
- Periodically review your documents: Year to year, relationships change, and, as all CPAs know, financial situations change. Regularly update your will to ensure your closest relationships are accurately reflected in the will.
- Who will your executor be? Being an executor is a thankless job, but it is an extremely important one with many responsibilities. You’ll want to choose someone who is ready to take on tasks, such as taking care of any debts and distributing your property and money properly.
- Make the time: For some people, the idea of taking heed of their finances is so daunting they put it off. However, it is important to make time to do so to ensure that your wealth is distributed how you wish in the event of misfortune. Work with a professional to either write a will or review your financial affairs, making sure your wills and estate plans are up-to-date. Failure to do so could have devastating financial consequences in the event of an unexpected death.
Don’t have a will or estate plan? Does yours need updating? Check out the 360 Degrees of Financial Literacy resources.