Saturday, November 5, 2011
Celebrities and athletes have unique estate planning needs. This special class of clientele typically does not have the traditional income stream of an average client since the future earnings of celebrities and athletes are usually projected at very high levels over a short time period. Because of this, estate planners need to utilize different estate planning techniques than are required for the average client.
Protection strategies play a key role in estate planning for celebrities and athletes. One way an estate planner can achieve creditor protection for his client is through the formation of a multiple member LLC in a state with favorable creditor protection laws. The multiple member LLC provides even more creditor protection when it is partly owned by an irrevocable trust.
A beneficiary defective irrevocable trust is another key estate planning tool used for celebrities and professional athletes. The trust will provide more asset and estate-tax protection if the client's parent or other relative establishes the trust. By having someone other than the client establish the trust, the client is treated as the grantor for income tax purposes and can use a Crummey power to withdraw the gift. Pairing a life insurance policy with the BDIT can help protect the client’s family and loved ones should the client pass away.
See Martin Shenkman, Star Power: Celebrities and Athletes Need Tailored Estate Planning to Mminimize the Risks of Being in the Spotlight, Financial Planning, Oct. 1, 2011.
Special thanks to Jim Hillhouse (WealthCounsel) for bringing this article to my attention.