Estate expert outlines benefits of leaving behind clear division of assets
Aretha Franklin may be have penned soul classics but it turns out the Queen of Soul failed to pen her own will.
Carol Bezaire, vice-president, tax, estate and strategic philanthropy at MacKenzie Investments, said she reminds skeptical clients that a will is your final voice to tell people what you want.
Franklin, however, opted to leave the division of her estimated $80 million fortune to fate, with reports suggesting it will, by law, be split between her four children.
While there is nothing to suggest there is any animosity within the legendary singer’s family about where her cash will go, the settling of her estate is still expected to be protracted and public. Bezaire said this high-profile example shows why it’s important to provide those left behind with a clear record of your wishes.
She said: “It’s so important. I do a lot of presentations to investors – not just about having a will but having an updated will because things change so quickly and the more money people have, the more difficult the beneficiaries can be as soon as there’s money there.
“I think with Aretha Franklin’s family, it’s an old gospel family and I think she tempted fate with that and thought it will all be fine; I won’t be here, I don’t care. But you could also end up with disappointed beneficiaries. Sometimes people will say, I am going to leave you this but if you don’t have a will, what evidence do you have that even happened.”
As well as avoiding family feuds, there is also tax savings available. Bezaire said there are two levels of tax which can sting the assets when someone passes away without leaving a will.
Firstly, there is probate tax, which means somebody has to go to court and get appointed to handle the estate on your behalf. This, she said, is paid for by the estate and is based on fair market value of your assets.
She added: “Then if you haven’t planned ahead, there’s income tax. If you don’t have your will taking care of your spouse, for example, you can’t do the rollovers of your spouse unless people make special elections. So there could be a lot of unnecessary income tax paid if there’s no plan or no will.”
Part of an advisor’s duty is to explain the virtues of getting your house in order and getting clients comfortable with the idea. Bezaire highlighted a current example she is working on, which she describes as a “beautiful roadmap” and lays out in 22 pages exactly what the executors – son and daughter – should do.
She said some clients don’t want to think about it because they are afraid of death.
“Some people even think that if they do write their final will, they are going to die right away! Well … not necessarily! I was talking to a client whose mother said wouldn’t do a will so I said why don’t you talk to her about it; get her more comfortable with the concept and start the conversation.”
