Although same-sex marriage is now legal on a national level, few couples have thought to come forward and update their estate plan. Unfortunately, this can be problematic. It can also lead to a significant loss of funds upon a party's death. Learn more about how an updated estate plan can benefit you and your partner, and why it is so important.

How Estate Planning Has Changed or Same-Sex Couples

Prior to 2015, same-sex couples who were not in a state that legally recognized their marriage had to find inventive ways to ensure their partner received benefits upon their death. Many had to take out insurance policies that were much higher than heterosexual couples because there needed to be enough to pay for estate taxes. This has now changed.

When creating an estate plan, there are many factors and issues to consider. Unfortunately, family dynamics do not always get quite enough attention. As such, many families are still left with a lot of conflict upon the passing of a loved one. Learn how to avoid this common issue by taking the time to consider the impact that family dynamics may have on your estate plan.

How Will Your Decisions Affect Your Family?

During the estate planning process, most people sit down and plan in one of two ways. The first group has a strategic plan - the eldest child might receive important family heirlooms, a wedding ring may be passed onto a daughter instead of a son, or allotments might be provided based upon what the guarantor sees as "fair." The second group typically considers their own sentiment. They might remember a granddaughter lovingly adoring a jewelry box, or special moments with a father and his son while working on dad's classic car, which may lead them to leave these items based upon their sentimental connection. Yet these are not always the most effective ways to estate plan.

Estimates indicate that just 64 percent of all Americans have a will. That number drops significantly, falling to 22 percent, in the 55 and younger population. Yet, when the fortunes of big celebrities are thrown into limbo because they failed to make an estate plan, Americans start to get serious about their own fortunes. Of course, not everyone has an actual fortune, but that does not mean you do not need an estate plan. The following covers some important lessons learned from celebrities who died without a will, and will hopefully help you understand the importance of having one in place for your estate.

Probate Costs and Taxes Can Significantly Reduce the Value of Your Estate

Whether you are a multibillionaire, a pop music idol, or just your average American, your estate may be subject to probate if you pass away without a will in place. This can get expensive, and fast. As an example, Prince's estate, which is currently valued at about $300 million has already racked up more than two million in attorney's fees. On top of that, there will be state and federal taxes to pay, which are often higher when you fail to create an estate plan. If you have even a meager estate, reduce the risk of its depletion in probate with an estate plan.

Prince Rogers Nelson, one of the most beloved pop icons in history, spent his life fighting to maintain creative and legal control over his career. Yet, in the months that followed his death, it became evident that he had not been quite as vigilant when it came to legally documenting what would happen to those assets after he died. In other words, Prince died without a will. As a result, his substantial estate - his alleged vault of unreleased music, his roughly $300 million in various assets - have become a cautionary tale that everyone can learn from.

What Happens in the Absence of a Will?

Prince's estate is being handled by the state. This means that the state appoints an administrator (who may not be a person you would approve of), and your assets will be distributed to the next of kin. This can be problematic for a number of reasons. First, the state must establish who your true heirs are. Second, the distribution to those heirs may not resemble your wishes.

According to the several financial studies, between 40 to 60 percent of Americans live paycheck to paycheck, meaning that they earn just enough to get by. For many, the thought of an early retirement—or any retirement—is not a current achievable goal because there are no funds left over each week to put into retirement savings.

Financial advisors have discovered ways that can free debt committed paycheck funds and can therefore be redirected into a retirement savings nest egg. For example, only one in three households in this country prepare and follow a monthly budget as a way to track their spending. This can lead to a lot of wasteful spending. By following the trail of where those paycheck funds go, you may be surprised at how much is actually coming in and going out.  

Families can also take a look at eliminating expenses that may be unnecessary and divert those funds into savings. Some of the biggest potential expenses include cable and satellite television packages. How many of those 450 channels does your family actually watch? If your family is also big take-out consumers, consider cooking more meals at home. There is often a large price difference in the per plate cost for a meal you prepare compared to the per plate cost of that meal from a restaurant. Magazine subscriptions and gym memberships are also areas that may be able to be cut or downsized.