(This post originally appeared on Inc.)
No question about it, both Prince and Aretha Franklin were musical geniuses. But when it comes to their businesses? Well, maybe not as much.
According to recent reports, the late Queen of Soul – a mother of four who amassed a fortune of more than $80 million – left no will or trust, which means that a court had to appoint her niece as a “personal representative” and assign the mess to a Michigan judge to figure out. “I was after her for a number of years to do a trust,” Franklin’s long-time attorney told The Detroit Free Press. “It would have expedited things and kept them out of probate, and kept things private.” That guy got no respect.
Unfortunately, it’s the same story with Prince. The rock star, who died unexpectedly more than two years ago, left a reported $200 million estate that is still being fought over in the courts. The musical-but-not-business-genius left no estate plan and no will. There’s no executor. No beneficiaries. But one thing’s for certain: like Aretha, he also left a big mess. While his siblings wrangle over who gets what, the money lies untouched and attorney and court fees are accumulating fast.
I’m a big fan of both musicians. But let’s make no mistake about it: they were both business owners. Like you, they had organizations, employees, brands and partners that were intertwined in their lives. It’s hard to believe how ignorant they were about their finances. Are you making the same mistake?
Maybe you’re amassing millions like Aretha and Prince – or maybe not. But regardless of the value of your business, every dollar that you’ve accumulated over the course of your professional life has been the result of your own blood, sweat and tears. You will die someday. So what will happen with the assets that you worked so hard to create? Are you leaving the world in a better place? Or are you leaving a mess behind.
“For many business owners, their business often comprises a meaningful part of their assets and/or future cash flow,” Carol Roth, the owner of FutureFile, which provides a system for documenting one’s legacy and wishes, told me. “So, what happens to the business financially can affect your family. It also affects all of the other stakeholders in your business- from partners and co-investors to employees to vendors and customers. And, while the technical ownership of the business is critical to have clear plans for, there is so much more to think through that isn’t covered by traditional wills or estate plans.”
What types of things does a typical business owner need to consider? Incapacitation. Medical emergencies. Immediate needs after a passing. Estate and financial planning of assets. The handling of personal effects, digital accounts, and private files. Directions and wishes for the handling of both personal and business properties. To Roth, it’s all critical.
“Planning is the best legacy you can leave your loved ones,” she said, noting that it’s essential to minimize the issues that a family encounters as they try to fulfill the wishes of a departed family member. “It’s also essential for making sure your business continues-or even winds down-in a manner that honors you and your work as an entrepreneur.”
So why didn’t Aretha Franklin or Prince do these very important things? Who knows? But one thing’s for sure: if you love your family then it’s your responsibility to make sure you have a plan. The last thing you want is to leave your spouse and children with headaches. They should be mourning your loss, not battling over your assets. Even if you have no family or don’t desire to leave your asset to them then you still have a chance to do something good with your wealth. Perhaps a charity. Or a great organization. Or hey…maybe I can leave you my phone number?
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