In my recent post on Cheapskate Estate Planning, I discussed how saving a few dollars in estate planning often costs more in the long run, both economically and emotionally. Most people are not aware of the ramifications of dying without an estate plan. And while no one could have predicted the untimely death of football player Steve McNair, it wasn’t hard to predict the inevitable confusion and delay that followed due to his failure to plan his estate.
It has been more than a year since Steve McNair was murdered on July 4, 2009. Within this last year, the only thing to be settled within his estate is a debt to a local artist for a family portrait. Without a will, it has been left up to the court to decide who is entitled to inherit from his estate.
Part of the delay has been caused by the difficulty in establishing heirs. Steve McNair died married to Mechelle McNair and had two sons with her. He also may have two older sons from two separate women that he never married. Both boys are named Steve, after their father. The two older boys cannot inherit under Tennessee law unless they prove by clear and convincing evidence that Steve McNair is their father.
Currently, it doesn’t appear that Mechelle is challenging the paternity claim from these boys. Initially when she filed the probate paperwork, she failed to list the older boys as beneficiaries and stated that she was the surviving spouse with her two boys listed as the surviving heirs. Yet, since the initial paperwork, things seem to have been clarified and now all four boys appear to be in line to inherit.
In Tennessee, when a person dies intestate without a will, the surviving spouse will receive one-third of the estate with the remaining two-thirds to be divided among the remaining heirs. The court is left to determine who is an heir and who is not.
Had Steve McNair had an estate plan he would have been able to name whomever he wanted as a beneficiary without worrying about whether his older sons would be provided for. Without a will, the court can conclude that there is not enough evidence to prove paternity and the two older boys could receive nothing.
Over a year after McNair’s death there has yet to be a determination as to who could inherit as an heir of his estate. A date has been set for September 28, 2010, to announce who will inherit from the estate. But it is not certain if they will find out how much is left to inherit or who will receive what specifically.
However, because a year has passed and the estate has yet to be settled taxes have become due. It is reported that as the surviving spouse, Mechelle, had to pay over 4 million dollars to cover federal, state and other fees on the estate for the past year. Taxes and fees can often be avoided by creating specific instruments to pass your assets through.
Along with taxes, the heirs have also incurred mounting legal costs in dealing with unresolved estate issues. For example, Mechelle has tried to sell her husband’s interest in a restaurant, Gridiron 9, which he started with his cousin. The cousin filed to stop her from selling and the matter had to be resolved in court. At this point, the estate still holds shares in Gridiron 9, but the restaurant is currently closed and incurring rental and waste costs.
Another issue McNair failed to plan for was the future of his charity, The Steve McNair Foundation. Because the estate assets are currently tied up waiting for the court’s decision, the charity has not received any funding from McNair’s family. The foundation appears to have shut down and has not hosted an event or sponsored any community activity since September 2009. The lack of a will has cost McNair the opportunity to continue helping a cause that was very close to his heart, youth sports.
Steve McNair has died leaving an estate that is worth over 19 million; however by the time the estate is settled and distributed (which realistically could be in 2011) a huge portion could be gone. And because of the unclear and dragged out process that occurs when someone dies without having even a simple estate plan, family, friends and foundations are left with the costs piling up.
About Jeramie Fortenberry
[...] I recently posted about the dangers of cheapskate estate planning–techniques like leaving an unrecorded deed with a family member. People usually try this type of thing to save a little in attorney’s fees, and often they spend much more in the end trying to clean up the mess. Others don’t plan at all, often leading to the high cost of dying without an estate plan. [...]