August 5, 2011
It’s no secret that the late singer, Amy Winehouse, struggled to keep her personal life together as her fame grew before the public eye. But what Amy did manage to keep in meticulous order though was her estate planning, which ultimately protected her wishes and fortune following her death.
It is widely reported that Amy took the steps necessary following her 2009 divorce to ensure that her ex-husband, Blake Fielder-Civil, would no longer be the beneficiary of her $16 million dollar estate. She instead saw to it that the money would be split between her father Mitch; mother, Janis; and older brother, Alex if something happened to her.
Had Amy failed to amend her will to reflect such a change of heart, it would have been likely that Fielder-Civil (who reportedly introduced Amy to hard drugs in the first place) would have inherited her fortune anyway, despite the divorce.
It’s important for everyone to keep in mind that a divorce does not necessarily void the beneficiaries you name in your will, trust or on other accounts such as a 401 (k) plan, life insurance policy or brokerage account. In most cases, if you don’t take steps to physically remove your ex-spouse from all estate planning documents and beneficiary designations, he or she could still inherit your estate following your death.
Take for example the recent passing of an estate planning attorney (yes, a lawyer!), who forgot to remove his ex-wife as the beneficiary of his IRA. Believing that the court would surely recognize this as a mistake, his widow went to court to fight for what she believed was rightfully hers. After a lengthy arbitration battle, the court was forced to uphold the lawyer’s initial beneficiary designations and awarded the proceeds of the IRA to his ex.
A quote from this story says it all, “Many supposedly sophisticated professionals and business persons simply fail to stay on top of their estate planning and, more often than not, the one thing that they overlooked is the one thing that turns their heirs’ lives upside-down.”
Don’t think this problem is just for the wealthy. Making sure things are properly taken care of is probably even more important to those of us with modest estates where even a small inheritance can make a difference to your loved ones.
To ensure this never happens to your loved ones if unthinkable occurs, take time to review your will, trust and other financial accounts on a yearly basis. Make sure they reflect all recent life changes (including marriage, divorce, re-marriage, birth of a child, adoption of a child, estrangement of a child or spouse, purchase of new assets, sale of assets, etc), so that your inheritance will be distributed to the people YOU want upon your passing.
Of course if you have an estate plan that is in serious need of an update, be sure to call our Gold River office at (916) 241-9661 and ask to schedule a free Peace of Mind Planning Session ($750 value). During this session, we can help you identify any changes that need to be made to your documents and take steps to ensure your plan will work when your family needs it the most. However, these sessions are limited to 10 per month so call today!