by Alicia Wanek
Prince sang, “Life is a party, and parties weren’t meant to last,” especially when you don’t plan ahead with life insurance. Independent insurance expert, Bobby Davidson, of Davidson Insurance Services in Dallas, knows all too well how a properly positioned life insurance policy could have helped in settling the estate of the musician Prince and how it can help all of us.
Just a little more planning could have made sure Prince’s hard-earned money was directed where he would have wanted it to go and avoided the headaches of the inevitable legal issues that are to come. A knowledgeable insurance agent can help you determine how to find a life insurance policy that protects your family and ensures your wishes are carried out as well.
Dying intestate, meaning without a will, certainly complicates matters, as the state will decide, based upon its laws, the order by which the heirs to Prince’s estate are determined. “This is always an ugly affair, and these estates can be tied up in court for years and sometimes decades,” Davidson says. A life insurance policy, which has proceeds paid to a trust, can ensure the funds go to heirs or charitable causes in detailed ways. “A trust and a will can work together like a road map for the estate,” according to Davidson. This will guarantee the donor that his or her intentions are considered.
The good news about life insurance policies is that the proceeds are generally tax free. So, for someone like Prince, a policy in a trust could have provided a lot of liquidity (think available cash) until the rest of the estate is settled. “No other asset can create the immediate access to cash that life insurance can,” Bobby points out. While Prince’s family argues over who inherits his studio, his home, his unpublished music and maybe his wardrobe, those funds can be used to pay the expenses that continue until the courts settle it all. “Those funds can pay estate taxes, buy time as the estate goes through the probate process and prevent the forced sales of other assets,” Davidson says.
The Prince case highlights the need for planning up front—and he had no wives or children. Another interesting high profile case is developing with BB King. He had 15 wives and 15 or so children. Imagine how that might play out…
For more information or to schedule a complimentary confidential consultation, contact Bobby Davidson at bobby@davidsoninsservices.com or at 972.980.4884.