Howard Hughes, the eccentric aviator, film producer and billionaire, died on April 5, 1976 without leaving a will. It took 34 years for his estate to be settled, finally winding up around 2010. One scrawled will that surfaced early was declared to be a forgery.
The famous and reclusive Mr. Hughes died without a will, meaning he died “intestate”.
It was equally surprising to discover that Prince, who died this year on April 21 at his home in Minneapolis, died without a will as well. Prince left behind a multi-million-dollar estate that in many respects will be enormously complicated to sort out without a will to direct his wishes and distribute his assets.
The odd coincidence between the two – Howard Hughes and Prince – is not just that they both died intestate, but that they also died with no apparent heirs: neither had children. It is therefore very likely that the Prince estate is going to be before the courts for years and enormous costs incurred as a possible battle between his sister, half siblings and other interested parties begins to take shape. The Prince estate is even more interesting as apparently the artist left behind a vault of unreleased and unpublished music which means we do not yet know the value of the estate and may not know for many years to come.
For the rich and famous, there are generally financial resources available to pay the army of lawyers and litigation that invariably follows when one dies intestate. However, for the rest of us, making sure you have an estate plan in order is just common sense and inexpensive compared to dying intestate.
The Prince affair reminds us why there are so many compelling reasons to make sure you have your will in order.
The purpose of a will is to provide for the orderly distribution of your assets at the time of death. If you do not have a will, you cannot select the person who will be your executor. This is the person who acts as your personal representative and is responsible for carrying out your wishes.
By the same token, without a will you cannot select your beneficiaries. These are the people who will benefit from your estate. You may have favourite charities you wish to name, or cousins, or friends that you wish to remember. Without a will, the Province of Ontario steps in by default (just as the State of Minnesota will do in the Prince estate) and has a default list of next of kin for the distribution of your estate. All this must be done within the framework of a more complicated legal process which can add considerable expense.
In some cases, people die without any known heirs. Genealogists may be hired to help trace an heir. If none are found within a certain time period, the estate will go to the Province.
Without a will it is possible that money for kids under the age of 18 is paid into court to be held in trust until the children reach age 18. Without a will there is no flexibility to set up trusts to help kids through university or for other family goals. They may also not be mature enough to receive an inheritance at age 18 when they become legal adults.
And of course, without a will there is no estate tax planning. This means there will most certainly be an increased tax cost to the estate. Assets such as a home, stocks, bank accounts, property and RRSPs all have different tax qualities. A proper estate plan can generally maximise tax savings for you.
It is no wonder that as the Prince saga unfolds overs the years to come we will see the recurring message about the importance of making sure you have your will in place – not just for you, but for those you leave behind as well.