History is littered with examples of poor life insurance and estate planning, and examples of how a lack of attention and review completely negates good planning.
Now I’m guessing that there aren’t a lot of pro football team owners reading this, but the rest of us can just downsize the scope of things and see how a lack of planning can completely blow up a family legacy. Joe Robbie’s family owned the Miami Dolphins back in the 1980’s. Mr Robbie was worth a lot of money when he died in 1990 at the age of 72. He didn’t do any planning for estate taxes which ended up being a $47 million dollar bill to his heirs.
Now keep in mind that estate taxes are due to the federal government within 9 months of the death. In order to meet that obligation Robbie’s family had to sell the Miami Dolphins which Robbie co-founded and helped build into a powerhouse that won two consecutive Super Bowls. That tax was really not avoidable, but selling the team was. If Mr Robbie had purchased life insurance to settle the estate tax bill, the Dolphins might still be part of the current Robbie family legacy. A failure to plan is a plan to fail.
Failing to review even a good will, life insurance policy or estate plan can have unanticipated consequences. Author Michael Crichton unintentionally left one of his children out of his will. He died suddenly in 2008 when his wife was pregnant, and seeing no urgency in changing his will, he died without ever adding the child. Estate documents should be reviewed and updated as soon as a significant life change begins. That means during a pregnancy, or when a legal action begins, such as a divorce.
Failure to review beneficiary designations in life insurance has led to plenty of people being legally enriched when it was no longer the wish of someone who passes away.
Bottom line. On one side of the coin it’s a little hard to feel bad for people that are rolling in dough and blow it by not planning, but on the other side of the coin are all of the people that are bowled over by the domino effect of a wealthy family losing all the money used to run businesses with. So, whether it’s planning ahead so your family doesn’t lose a football team or planning ahead so your family can afford to stay in the house you are buying, plan and make a habit out of annual reviews of that plan.