Take Jimi Hendrix as an example:
In 1970 he had just $20,000 in his bank account. But he also had lots of debts and unpaid taxes. So while he wasn’t exactly poor, he was not a wealthy person either.
Plus, he was young. That’s another reason you don’t need an estate plan. If you are young you don’t need to worry about dying.
Unfortunately for Jimi, even though I am sure he didn’t plan to die, that’s exactly what happened. On 18 September he joined what is now known as the ‘27 Club’ – whose celebrity members all died at that age. (Some other members of the club include Kurt Cobain, Brian Jones, Jim Morrison, Amy Winehouse, and Janis Joplin. There are quite a few interesting estate planning lessons to be learned from this group, but for now, let us return to Jimi).
Jimi did not have that much money, and he did not have a will. He was not married, and he had no children, so when he died, 100% of his estate went to his father, Al Hendrix. Jimi apparently had a close relationship with his brother Leon, so it may be that he would have preferred his estate to go to Leon rather than his father. Whether that’s true or not, we will never know.
But the story does not end there. When he died, Jimi was not a rich man. But he (or his estate) is very rich now. The estate currently has assets of around 4 billion CZK and makes 146 million CZK a year from royalties.
Leon, perhaps understandably, was not happy that none of the wealth was headed in his direction and sued to try to get some of the money. The main outcome of that seems to be that estate spent a lot of money on legal fees.
But perhaps you are thinking “never mind, everything will be all right in the end, because Leon will inherit when the father dies”. Sadly, that also didn’t work out. When Al Hendrix died in 2003, his estate left all of his rights in the Hendrix estate to his adopted stepdaughter, Janie – and completely excluded Hendrix only blood-related sibling, Leon
Not surprisingly Leon kept trying, but the main winners from that were the lawyers.
This argument and the resulting family conflict is still continuing today.
All of this could have been avoided if only Jimi had made a simple plan for his inheritance. Not only would that have avoided all these problems, but more importantly Jimi would have achieved the result he actually wanted
Here are the lessons from this:
Lesson 1 – Even if you are not rich, you need an estate plan.
You might not be rich today, but by the time you die you might be. Your plan does not need to be complicated, and it can be as simple as a will – but you do need a plan
Lesson 2 – Even if you are young, you need an estate plan
Because you never know . . .
Lesson 3 – Don’t assume everything will work out well in the end
It usually doesn’t