Where Does Your Wealth Go?
Continuing to focus on the case of Prince as an example, without a clear estate plan your wealth may not be distributed as you prefer. In order for your money to go to the people and causes you want it to, you need to lay out your wishes in an estate plan. For example, under Minnesota law half siblings are consider the same as full-blood siblings. This means Prince's sole sister is not necessarily guaranteed to receive all of his wealth, despite the fact that some of his half-siblings have not had contact with him in more than two decades. Moreover, the courts will have to decide who gets how much of which assets.
Creates Family Tension
Perhaps the most detrimental consequence to the social fabric of those left behind is the tension a lack of an estate plan creates between surviving relatives. While some family members may have been promised certain assets, if that is not spelled out in a formal plan, there is a high possibility of infighting between family members as they jostle to get assets that have value to them, emotionally or financially.
Detrimental to a Business
If you amassed wealth over the years as a result of a business you built with your own two hands, failing to establish an estate plan can be detrimental to the future of that business. Entrepreneur points out that, above all else, an estate plan is important because the business itself is likely your family's major source of income, and that wealth will remain tied up in the business going forward. Additionally, there is also the matter of succession in the business. Your employees deserve peace of mind regarding their futures, and the sense of security that comes with an established plan for the company to carry on after you are gone.
Protect Your Loved Ones
Your passing comes with a lot of expenses, from debt you leave behind to funeral costs. No matter how much wealth you have built up over time, if you do not have an estate plan that sets aside certain assets to cover debts you leave behind and provide a stockpile of cash to cover funeral costs, your family could be left holding the bag.
An estate plan is not something you have to have by law, and in many states there is legislation to deal with assets of an individual after passing. However, those systems are slow and often deprive your family of the full value of your assets. You can avoid these consequences by simply setting up a clear estate plan today.