When hip-hop star DMX died in 2021, he had no will and only a few liquid assets. His estimated 15 children are expecting a share of his estate, but the estate has been in the probate court for months. An estate also has to be established to manage any expected future earnings from his music. However, with no appointed administrators and legal costs, DMX’s estate will be dwindling until the proceedings are finalized. Use of the right estate planning tools could have avoided this situation.
In fact, some reports estimate that DMX's net worth was estimated to be $10 million. However, it fell to a perhaps even negative $1 million at the time of his death.
Estate planning lets you stay in control of your assets, while contributing to your family’s generational wealth. Let’s look at five tools necessary to create a comprehensive estate plan.
- Will. A will establishes the distribution of your individual assets. A will is also important if you have minor children because it is the only way you can nominate a guardian of your choosing for them.
- Trust. A trust is a fiduciary arrangement that lets a third party (the trustee) hold assets on behalf of a beneficiary or beneficiaries. Trusts can be arranged in many ways and can specify exactly how and when the assets pass to the beneficiaries.
- Power of Attorney. This lets you appoint a trusted person to act on your behalf as your agent or attorney-in-fact. He or she will handle financial decisions on your behalf, such as real estate transactions, banking transactions, insurance and Medicare.
- Health Care Proxy. This document allows someone you have appointed to make medical decisions in the event that you cannot.
- Living Will. If you have a terminal illness or death is imminent, this document identifies the treatments or medications you would want administered, withheld, or withdrawn, allowing you to remain in control of your end of life. In short, this lets people know what you want and do not want.
To learn more about estate planning in the Madison, Wisconsin area schedule a call with Attorney Rick Coad.
Reference: Finurah (Feb. 5, 2022) “Not Just for the Rich: Five Estate Planning Tools Everyone Needs”