Errors Lead to Terror for HeirsSubmitted by MIRUS Financial Partners on June 15th, 2016
Famous Wills and What Went Wrong
Do you have a will? Have you written down what happens in the event that you or your spouse passes on? It’s important to create a will and an estate plan, and review it at least once a year. Involve your lawyer and your financial planner to develop a plan that protects your legacy from excessive taxes, needless limitation or family feuds.
In addition to having an updated will it’s important to think about the tax implications of inheritances, the role of trusts, life insurance options and structuring the ownership of assets such as portfolios, real estate and business interests.
Here are a few cautionary tales from celebrities who might have benefited from wise financial counseling.
Philip Seymour Hoffman's Will
An outdated will clashed with New York laws governing estates. While his son was named, he didn’t update to include his daughters. Years of litigation may follow as the family sorts out the multi-million dollar estate. Hoffman left some of his estate to his son and the rest to his partner and mother of his children. Because O’Donnell was Hoffman’s girlfriend, she will not benefit from the spousal deduction of an additional $5.34 million. An updated will and tax planning could have saved his heirs millions.
James Gandolfini's Will
While Gandolfini was an outstanding actor, he was not as talented at estate planning. His estate, estimated between $70 and $80 million, was dramatically reduced by taxes, estimated around $30 million.
Leona Helmsley's Will
“The Queen of Mean” left most of her $5 billion estate to charity and created a $12 million trust for her dog, named Trouble, completely cutting out two of her grandchildren. The grandchildren sued the estate, claiming grandma wasn’t mentally fit to create her will and trust. The case settled, with Trouble getting $2 million, and the grandkids sharing $6 million, plus legal fees.
What can you do to structure your estate plan in ways that meet your original intentions?
See if a trust is right for your estate plan
Consider tax-efficient gifts and transfers
Keep your will updated, and be very clear about your intentions
Check into the role of life insurance and be clear about their tax implications.