With the untimely death of Whitney Houston, it might prompt you to get your own estate affairs in order. In Houston's case, she just won a legal case over her late father's estate, and she was going to be paid back money that he owed her. Now, with her untimely death, there may be more court battles waged over her estate.

Many years ago, Houston lent her father a large sum of money and they set up a way for him to pay her back. Houston's father took out a life insurance policy on his own life and named his daughter the beneficiary. He also structured the policy not to be included as income for his daughter for tax purposes. Upon his death in 2003, the policy proceeds went to his daughter and should have gone smoothly, but neither planned that his wife would file her own suit to collect on the proceeds of the life insurance policy. His wife wanted the proceeds of the policy to pay off the mortgage on the residence she shared with her husband. Houston counter-sued and recently won the multi-year battle a few weeks ago.

Even though Houston's father had the policy properly set up to avoid income and estate taxes, there are independent rules for income and estate taxes and only a professional tax attorney can navigate the differences between the two.

No matter your age or whether you are a celebrity or not, you should consider creating a comprehensive estate plan that minimizes estate taxes and respects your wishes regarding the distribution of your assets. An attorney will help you develop an estate plan that deals with both taxable and nontaxable issues that most families face. With no estate plan in place, you risk the federal government and the state you live in to determine how your estate is distributed to your loved ones. You will also increase the likelihood that federal or state taxing authorities will collect a significant portion of your estate in taxes.

As for Houston's estate, the coming months will show if she had a good estate plan in place for her loved ones.

Source: Forbes, "Whitney Houston's Death and Taxes," Robert W. Wood, Feb. 13, 2012