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Most celebrities have some degree of considerable wealth and may have their affairs handled by a team of agents, financial advisors, and attorneys. It thus comes as a surprise to many us when we learn that when some celebrities pass away, they were guilty of numerous errors in their estate plans or failed to have any estate planning at all. In a number of these cases, the celebrity failed to use an estate planning lawyer who could have easily drafted an estate plan to account for the contingencies and other unforeseen circumstances that often arise after the Will or other testamentary instruments were drawn up.
From the estates of James Brown, Pablo Picasso, Seymour Hoffman and numerous other celebrities whom estate planning specialists refer to as an example of what not to do for your estate plan, here are 6 estate planning lessons we can learn from celebrities:
1. Avoid the estate tax. The required filing in 2015 is for estates with gross assets and prior taxable gifts that exceed $5.43 million, or $10.86 million for married couples. Numerous celebrity couples easily meet and exceed this amount but have done nothing to minimize their tax liability. With proper planning, their estates’ value can be minimized with tax free gifts of $14,000.00 to any one individual per year. If you give each of your 3 children and 5 grandchildren $14,000.00 per year, you reduce your estate’s value by $112,000.00 each year, or $224,000.00 if you are married. Other measures designed to reduce your estate’s value include establishing an irrevocable trust, an LLC or FLP (Family Limited Partnership) and other legal documents.
2. Have more than just a Will . This was glaringly obvious in the estate of the late James Gandolfini of The Sopranos hit show who had but one trust for his son that was funded by a life insurance policy despite having an estate valued at over $70 million. Also, a Will is probated and is public so that everyone knows all about your affairs, the value of your estate and to whom you did and did not leave assets.
3. Include provisions for children born after the Will . Actor Seymour Hoffman’s estate was guilty of not including a provision in his Will for 2 of his 3 children who were born after he drafted his Will. Also, because he was not married, his girlfriend does not benefit from the $5.43 million estate tax exemption.
4. Carefully construct your trust fund . Do you want to give thousands (or millions) of dollars to your 21-year old child who may well squander it, or wait until they are 35 or 45 when they may be more mature and able to invest the money wisely.
5. Update your estate plan . Have an estate planning attorney to not only draft your initial estate plan but to periodically contact you on making revisions and updates. For instance, a person you named as guardian of your minor children may turn out to be an alcoholic or criminal. Although the other parent of your children will probably be the sole custodian, do not assume that this will be the case. Also, the title to after acquired real estate and other property should be transferred to a trust or it may have to be probated and will add considerable value to your estate, potentially exposing it to federal estate taxes.
6. Have an estate planning attorney develop your estate planning strategy . In so many celebrity estate fiascos, the Wills or trusts were set up personally by the celebrity or by an agent or attorney with no estate planning experience. Consequently, substantial taxes are owed and the heirs are left with a fraction of the estate they could have inherited had the celebrity been properly advised by someone who knew what they were doing.
Celebrities are larger than life and their mistakes are amplified by their notoriety, wealth, and often careless approaches to life that many of us hunger to read about. At least for estate planning purposes, you can avoid the mistakes so many celebrated personalities made by consulting with Estate Planning Attorney Patricia Bloom-McDonald.
Attorney Bloom-McDonald has been working in the estate planning field for over 20 years, advising elders and younger clients about their estate plans and formulating personal strategies. She can consult with your financial advisors, accountants, caregivers, and other professionals so everyone works together to achieve your goals. Contact her today for a free, initial consultation about all your estate planning needs and concerns.